Ethereum Price Prediction: ETH could be set for a 'supply squeeze' amid steady demand - Sygnum

Ethereum price today: $4,420

• Strong accumulation from ETFs and corporate Ethereum treasuries could spark an ETH supply squeeze.
• The rising demand for ETH follows improvements from the Pectra upgrade and positive developments in crypto regulation.
• ETH technical indicators post mild bullish signs as it retests resistance near $4,500.

Ethereum (ETH) retested the resistance near $4,500 on Thursday, following a report by Sygnum Bank predicting that the top altcoin could be set for a supply squeeze due to accelerated accumulation from exchange-traded funds (ETFs) and corporate treasuries.

Ethereum's price growth spurred by Pectra upgrade and regulatory tailwind

Ethereum could be set for a notable supply crunch following increased demand in recent months, according to a Tuesday report by Sygnum Bank.

"Against the backdrop of liquid ETH exchange reserves below cycle lows and demand from ETFs and acquisition vehicles accelerating, Ethereum now faces very real prospect of a supply squeeze that will certainly test the market," the bank wrote.

Since Ethereum's Pectra upgrade in early May, ETH has significantly outperformed Bitcoin (BTC) and Solana (SOL), rising 140% against 15% and 42%, respectively.

The bank noted that ETH's outperformance stems from a mix of several factors, including staking and scalability improvements from the Pectra upgrade, the SEC's clarification on liquid staking and the establishment of positive crypto regulatory frameworks through the GENIUS and CLARITY Acts.

These factors have proven to be powerful tailwinds for ETH, driving demand through ETF inflows, corporate Ethereum treasuries, and intense whale accumulation, the report added.

Since May, US spot Ethereum ETFs have seen over $10.3 billion in net inflows, according to SoSoValue data. Meanwhile, corporate entities have acquired nearly $16 billion worth of ETH, per the Strategic ETH Reserve data.

Additionally, whales holding between 10-100K ETH accumulated 5.6 million ETH during the period, according to CryptoQuant data.

The yield-bearing opportunities Ethereum provides are attracting these entities, especially after the SEC clarified that liquid staking activities do not fall under securities offerings.

"Not only will the integration of staking clearly differentiate Ethereum ETFs from their Bitcoin counterparts, but it will also act as a catalyst for fresh institutional flows looking to benefit from the passive staking yield," wrote Sygnum analysts.

The bank noted that demand pressure has sent ETH exchange reserves below cycle lows and is still shrinking. The withdrawal from exchanges has flowed toward staking protocols, which now hold nearly 30% of Ethereum's supply.

"Deposits are likely to continue as the odds of approving ETF staking (with in-kind redemptions recently approved) grow increasingly more favourable," the report states.

Sygnum added that the recent surge in validator exits doesn't contradict the prediction, as the exits were largely spurred by investors rebalancing their looped staked holdings rather than profit-taking.

"The backlog is largely a result of trades where ETH is staked and more ETH is borrowed against liquid staking tokens, which were also staked (often in multiple loops), and became unprofitable once ETH borrowing rates moved above staking yields," noted Sygnum analysts.

Ethereum Price Forecast: ETH post mild bullish signs in technical indicators as it retests $4,500 resistance

Ethereum experienced $71.8 million in futures liquidations over the past 24 hours, comprising $38.1 million and $33.7 million in long and short liquidations, per Coinglass data.

ETH retested the resistance near $4,500 on Thursday after breaking above the upper boundary of a descending triangle pattern. ETH has to flip $4,500 into a support level before it can initiate a rally toward its all-time high resistance at $4,956.

ETH/USDT daily chart

A potential uptrend is supported by the Stochastic Oscillator (Stoch), which has risen above its neutral level for the first time in September and the Relative Strength Index (RSI), which has crossed above its moving average line.

On the downside, ETH could find support at the 50-day Simple Moving Average (SMA), just above the support around the $4,000 psychological level. A decline below these levels could send ETH toward $3,500.