Weak demand keeps Ethereum below 2,000 despite potential supply squeeze
Breakout above $2000 failed
Ethereum's price action has been struggling to maintain momentum after an attempted breakout above $2,000 failed to hold gains and retraced back to $1,955. As of March 21, Ethereum remains below $2,000, trading around $1,980 with limited volatility.
The failed breakout and subsequent decline can be attributed to weak buying pressure and prevailing bearish sentiment in the market. Broader risk-off sentiment in financial markets has limited upside moves, while Ethereum's daily RSI remains in bearish territory, reinforcing downside risks.
ETH/USD price dynamics (March 2025). Source: TradingView.
Ethereum's rejection at $2,000 during the late Asian session suggests strong resistance at this psychological level. The daily RSI remains below 50, indicating bearish momentum, while the lack of volatility in the European session shows uncertainty among traders. If Ethereum fails to regain $2,000, further downside could be expected, with $1,955 acting as the next key support level.
Exchange supply decline hints at potential bullish ETH outlook
However, a significant fundamental shift may influence Ethereum's future price movements. On-chain data from Santiment shows that Ether’s supply on exchanges has dropped to 8.97 million, the lowest level since November 2015. Exchange balances have declined by 16.4% since the end of January, suggesting that investors are shifting ETH into long-term storage. This reduction in supply could limit selling pressure and create conditions for a potential supply squeeze if demand increases.
Ethereum’s ability to reclaim $2,000 will be critical for any bullish recovery. A decisive move above this level could trigger a retest of $2,070, while continued weakness may push prices toward $1,955 or lower. The declining exchange supply signals a potential long-term bullish case, but for a rally to materialize, market demand must strengthen above the $2000 key level for confirmation of a bullish outlook.
The Fed’s signal of slower quantitative tightening boosted risk appetite, helping Ethereum break its consolidation. However, the price faced resistance at the 100 EMA.
