Ethereum Price Surges 25% in October, Exchange Supply and RSI Indicate Continued Upside Potential for ETH

Starting from October 19, Ethereum (ETH) has been on a continuous rise, surging from $1,500 to a high of $1,860, representing a nearly 25% increase. In the past 24 hours, ETH has risen by 0.11%, with trading volume increasing by almost 90%.

ETH Daily Price Chart (2023.7-2023.10), Source: TradingView.

With increasing buying pressure, ETH may extend its upward momentum, breaking through the immediate resistance at $1,856 and reaching the level of $1,900. In a highly bullish scenario, the price of Ethereum could see a broader increase, returning to the predicted psychological level of $2,000, representing a 10% surge from current levels.

Currently, momentum indicators including the Relative Strength Index (RSI) and the Awesome Oscillator (AO) support the bullish trend, indicating a bullish alignment. The RSI remains above the 70 level, suggesting that bulls may take further action in Ethereum's price. Similarly, with bulls dominating the market, the AO remains in positive territory.

ETH/USDT 1-Day Chart, Source: TradingView.

As shown in the chart below, the supply of Ethereum on exchanges is decreasing, indicating that despite the continuous rise in ETH price, investor selling interest is diminishing. This suggests that investors are willing to ride the upward trend rather than take profits early. 

Additionally, as investors become excited about the rising trend in Ethereum's price, Ethereum's social dominance continues to strengthen.

ETH Dominance and Exchange Supply, Source: Santiment.

Furthermore, the market capitalization of Tether (USDT), a stablecoin, is also growing, usually attributed to new funds or capital flowing in as investors seek to purchase ETH.

USDT Market Cap Trend, Source: TradingView.

If unable to break above $1,856, the price of Ethereum may experience a decline, potentially even losing the key support provided at the $1,748 level. A decisive daily candle close below this level would invalidate the bullish argument. In the worst-case scenario, such a move could plunge Ethereum's price back into a consolidation phase, falling below the psychological level of $1,700 to $1,591. The worst-case scenario might see ETH drop to the support at $1,523.

According to Santiment's Market Value-to-Realized Value (MVRV) ratio, Ethereum's price is currently in a "danger zone" within the last 30 days. This indicator measures short-term profit/loss for holders and currently shows a peak since October 21, indicating a risk of profit-taking. In the past, when this level was breached, short-term holders with substantial profits cashed out early.

Ethereum MVRV, Source: Santiment.

In general, when MVRV shows higher values, it suggests a higher level of unrealized profits. Therefore, there is a higher risk of investors selling their holdings to realize profits. Conversely, low MVRV indicates lower levels of unrealized profits, which may suggest undervaluation or lower demand for the asset.