Bullish Ethereum price signals: $2,000 per ETH by year-end?

Several on-chain indicators suggest that the price of Ethereum could see an imminent rally, as the circulating supply of ETH on cryptocurrency exchanges is in sharp decline.

Monitoring the change in supply of a cryptocurrency on CEXs is crucial for making medium-term predictions, as this metric provides important information about the potential selling pressure of an asset.

The price of ETH could be closer than ever to a bullish break of $2,000 per coin, which could happen by the end of the year, given and taking into account the historical returns of the cryptocurrency market in the fourth quarter, especially in October.

Let’s look at all the details together and try to shed some light on it.

On-chain data shows positive signs for Ethereum’s future price

Although the general outlook for the cryptocurrency market is not the best, some on-chain indicators show very positive conditions for Ethereum’s price in the medium term.

In particular, we can see that ETH’s balance on centralised exchanges has fallen dramatically since the beginning of the year, reaching its lowest level since May 2018.

Indeed, since 1 January 2023, the number of coins on CEX has fallen from 18.48 million ETH to the current 14.56 million. This represents a reduction of almost 4 million crypto coins, which are now held in private wallets or staking on the Beacoin chain.

This helps to alleviate potential selling pressure on platforms such as Binance, Coinbase, Kraken, Bybit, Okx, etc., where there is generally more trading taking place and more short positions being opened with derivatives.

If this trend continues for a few more months (and demand picks up in parallel), the price of Ethereum is likely to rise significantly.

Still on the subject of changes in stock market reserves, it should be noted that, according to the Santiment platform, around 110,000 ETH were withdrawn on 4 October, accelerating the flight of capital to decentralised platforms and wallets.

This is an unusual movement, behind which a whale or a series of individuals with considerable economic power are likely to be hiding.

Currently, there are approximately 115.88 million ETH outside of exchanges, of which approximately 27.32 million are staked on the proof-of-stake network.

In October 2022, this number was around 14.1 million ETH: this means that in about a year, more than 13 million ETH have been taken out of circulation and placed on the Ethereum storage contract or on a liquid staking platform.

It is also interesting to note that the current price of Ethereum is roughly the same as it was then (closing price October 2022), so those who locked their coins exactly one year ago today can boast a return of around 4-5%.

Will ETH reach $2,000 by the end of the year? 

Having looked at the on-chain data, which suggests that there is fertile ground for Ethereum’s price growth, let’s talk about predictions: will ETH reach $2,000 by the end of the year?

Let’s start with the assumption that, despite the optimism of indicators based on the internal movements of the blockchain, the most important context to watch is the macroeconomic one, especially in the US territory, where a further increase in interest rates on government bonds could be in sight in November.

Such a scenario could lead investors to reduce their allocation to more speculative markets such as cryptocurrencies, with negative consequences for the price of ether and the crypto sector in general.

Furthermore, the issues surrounding the possible approval of a spot ETF on Bitcoin could also indirectly affect the price of the second largest cryptocurrency by market capitalisation.

Indeed, it is well known that BTC and ETH almost always move in tandem, and a catalytic event such as the approval of the first legitimate spot ETF in the US would certainly trigger a major uptrend for Ethereum as well.

Speaking of ETFs, it is worth noting that an ETH futures on ETF was approved by the SEC a few days ago, but generated very little investor interest with only 2 million trades.

Coming back to our original question, we can confirm that it is very likely that if the FED reverses its monetary policy strategy by switching to quantitative easing and/or if the SEC approves the first spot ETF for BTC in the US, then the price of Ethereum will be well above the $2,000 mark.

Unfortunately, if these two events do not happen by the end of the year, the on-chain data may not be enough to push the value of ETH to that level.

While these types of indicators work well in the medium term, they are not accurate in the short term.

Several traders are currently short ETH, fearing that the weekly candles that have formed since the beginning of the year have contributed to the “bear flag” pattern that usually indicates the possibility of upcoming declines.

On X, user ‘Chill Trader’ shared his opinion on Ethereum’s price action, saying that while he expects a bullish bounce in the next few days, he believes that a breach of the $1,565 level will result in another dump that will take the price of the coin into a range between $1,440 and $1,370.