As Ethereum [ETH] approaches the $4,000 level, investors are placing buy orders for the asset in anticipation of a potential rebound.
Whale activity particularly supports this notion. In fact, with ETH being deposited into exchanges and overall exchange reserves continuing to decline, a supply squeeze may be imminent.
Whale interest in ETH has surged again!
In the past 24 hours, whale activity has noticeably revived.
Whales (addresses that control a large amount of liquidity) often influence market direction through large transactions.
One of the whales, Aguila Trade, recently closed a short position on ETH after suffering losses exceeding $8 million, and subsequently opened a long position.
According to HyperDash, new long positions valued at over $128 million have been established, with unrealized profits currently at $631,000 as of the time of writing.
Similarly, LookonChain reported that another whale withdrew 13,244 ETH (worth $49.52 million) from the cryptocurrency exchange OKX and transferred the funds to a private wallet.
This transfer often signals a long-term bullish outlook, as investors show intent to hold rather than sell in the short term.
Spot and on-chain activity support bullish sentiment.
There has been a significant inflow of funds in both the spot market and on-chain.
According to CoinGlass's spot exchange netflow data, investors resisted the continuous sell-off of the previous two days.
These investors have currently accumulated over $70 million worth of ETH and transferred it to private wallets, highlighting a broader, long-term bullish market sentiment.
Artemis also reported significant liquidity inflow from other blockchains into Ethereum.
Bridge netflow from external ecosystems reached $4 million, indicating a capital rotation into ETH, as investors may anticipate a strong rebound.
In fact, the activity across exchanges indicates further growth potential, and signs of an impending supply squeeze are increasingly evident.
A slowdown in deposits has led to a decrease in forex reserves.
The amount of ETH held by exchanges has significantly decreased. Despite an increase in exchange reserves in previous weeks, the downward trend has resumed.
At the time of writing, the available ETH on exchanges is 19.7 million, indicating that investors are withdrawing assets from exchanges, thus reducing the likelihood of sell-offs in the short term.
In fact, the number of deposit addresses has sharply declined, reaching a low point on July 7.
Currently, only 16,000 addresses have deposited ETH, indicating a reduction in selling activity, especially after ETH's 54% increase over the past four weeks.
If this trend continues, the reduction of available ETH may trigger a supply squeeze, where demand exceeds the limited available supply, potentially driving prices up further.
