Ethereum is experiencing renewed volatility and uncertainty after several weeks of consolidation, with price action showing the market is struggling to establish a clear direction. Although ETH remains tied to recent trends, fundamental volatility suggests that the current phase may be masking a deeper structural change.
According to a report by CryptoQuant, the Ethereum market may appear to be stagnant, but on-chain data points to a tightening supply environment combined with recovering demand. One of the most notable developments is the continued decline in exchange reserves, which dropped to around 16.2 million ETH, the lowest level recorded since 2016. This trend shows that few coins are readily available for trading on centralized platforms.
At the same time, a large part of the supply is removed from circulation by staking. About 37 million ETH are now locked up, further reducing liquidity in the market. This dual dynamic—decreasing exchange rates and increasing stock supply—effectively squeezes available capital.
In this context, even a moderate increase in demand can have a disproportionate effect on price. While short-term volatility continues, the combination of reduced supply and demand for stability suggests that Ethereum’s current consolidation phase may precede a more meaningful move.
Demand Recovery and Structural Reset to Support the Ethereum Thesis
The report goes on to explain that Ethereum’s recovery is increasingly supported by actual network activity rather than hypothetical flows. Active addresses have increased in recent weeks, with significant increases indicating a meaningful increase in usage across the network. This trend reflects real demand, especially since the lower gas prices following EIP-4844 accelerated the adoption of Layer 2 and improved performance. Unlike previous cycles, when price appreciation drove activity, current conditions suggest that fundamentals are leading the recovery.
In derivatives markets, a similar trend occurs. Open interest (OI), which expanded to high levels, was released during the correction and is now slowly rebuilding. This reset indicates that the excess authorization has been cleared. Importantly, the current increase in OI remains moderate and has not been accompanied by extreme liquidity levels, pointing to a healthy environment and recapitalization.
Institutional development also reinforces this change. The introduction of staking-based ETH, combined with improved regulatory clarity in the US, lowered the barriers to entry for large investors.
Taken together, the structure of Ethereum is improving. With tighter supply, increased organic demand, and general strength, the market appears to be transitioning into a more sustainable phase, which may mark the first stages of a broader uptrend.
Ethereum Holds Key Weekly Support as Macro Structure Remains Uncertain
In the weekly time frame, Ethereum is trading around $2,100–$2,200, a level that appears as an important support area following the recent sharp rejection from the $3,500–4,000 range. The chart shows that Ethereum has changed from a bullish extension phase to a correction structure, with lower highs forming from late 2025.
From a trend perspective, Ethereum is now testing the 200-week moving average, a historically important level that often defines long-term market direction. The price is currently moving above this region, suggesting that buyers are trying to protect it. A sustained hold above this level would indicate structural stability, while a breakdown could reveal a deeper decline towards the $1,800 area.
The 50-week and 100-week moving averages are beginning to flatten and converge near current price levels, indicating a loss of momentum and increasing pressure. This usually precedes a major move, although the direction remains unclear.
Volume analysis shows high activity during the recent selloff, which points to distribution or forced sales. However, the subsequent stability suggests that demand is pulling supply at current levels.
Featured image from ChatGPT, chart from TradingView.com
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