Key Points:
The decline in ETH supply on exchanges indicates that a potential upward trend is forming.
Ethereum's weekly DEX trading volume surged by 47%, reflecting an improvement in market sentiment.
Historical data shows that the average ETH price increases by 4.77%.
The ETH price returned to above $4000 on Monday, rising 3.5% in the past 24 hours. This recovery has sparked market expectations for ETH to resume a bullish trend in October, a sentiment strongly supported by various on-chain data, historical data, and technical analysis.
According to Cointelegraph, the ETH supply on centralized exchanges has dropped to its lowest level since 2016, a trend primarily driven by the continuous accumulation of assets by institutional investors.
CryptoQuant analyst CryptoMe pointed out that the decline in exchange ETH reserves is mainly due to three reasons:
Investors transferring assets to self-custody wallets
Transferring ETH to staking services or other exchanges
Funds being moved to new wallets
At the same time, the overall outflow of funds from Ethereum exchanges is on the rise. CryptoMe stated in Saturday's Quicktake analysis that the current outflow has reached levels seen in the late stages of the 2022 bear market, when quantitative tightening policies were at their "peak."
Subsequently, the FTX crisis led to a massive withdrawal of ETH tokens from exchanges.
"Is ETH about to experience explosive growth?" the analyst questioned, further noting:
The activity on decentralized exchanges (DEX) on the Ethereum network surged by 47% in a week, reflecting an increasing bullish sentiment in the market.
Data shows that in the past seven days, the DEX trading volume on Ethereum significantly increased by 47% from the previous week's $22.9 billion to $33.9 billion. This trend is also evident in its Layer 2 scaling solutions, such as Base, Arbitrum, and Polygon.
Meanwhile, the market recovery of Ethereum's competitors has been relatively mild, with Solana's DEX activity increasing by only 6% and BNB by 8.3%.
The positive trading volume growth trend for Ethereum also includes a 30% increase for Maverick Protocol and a 26% increase for Uniswap compared to the previous week.
Historically, the growth in Ethereum DEX trading volume is usually accompanied by price increases, closely related to the rising on-chain demand for ETH. For example, between June 30 and August 14, when weekly DEX trading volume surged by 276% to a historic high of $40 billion, the ETH price nearly doubled.
According to monitoring resource CoinGlass, ETH/USD fell by 6% in September, consistent with historical price behavior patterns.
However, the average return in October is 4.77%, suggesting that the ETH price could rise from current levels to nearly $4300.
Crypto analyst Marzell noted on the X platform last week: "The historical monthly returns of Ethereum show a clear pattern, indicating that October and beyond is a bull market season." He added:
Based on ETH's past performance, fellow analyst Midas also predicts a strong bull market in the fourth quarter.
Midas stated in a post on X on Monday: "ETH is repeating the same pattern as Q3 2020." He added that after the last occurrence of this performance, fourth-quarter returns exceeded 100%.
🚨BREAKING: $ETH IS REPEATING SAME Q3 2020 PATTERN LAST TIME, Q4 RETURNED OVER +100% YOU ARE NOT PREPARED FOR WHAT'S COMING pic.twitter.com/akluHcZcMw
Related: The Hidden Forces Behind Bitcoin (BTC) and Ethereum (ETH) Price Volatility — Options Expiration
This article does not contain any investment advice or recommendations. Any investment and trading activities involve risks, and readers should conduct their own research before making decisions.
Original article: “Ethereum Reclaims $4000: Three Reasons Why ETH Price Will ‘Soar’ in October”
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