The price of Ethereum confirms a bullish reversal pattern as exchange supply falls rapidly.

The price of Ethereum has broken out of the bullish reversal pattern as the supply of tokens held on exchanges continues to decline to unprecedented low levels.
According to data, Ethereum ( $ETH ) price fell for nearly two weeks from $3,633 recorded on November 10 to a monthly low of $2,680 on November 21. Since then, the price has rebounded back above $3,000, a level that analysts note must be maintained for a possible trend shift from bearish to bullish. Trading at $3,013, this second-largest cryptocurrency is up 7.3% in the last 7 days but is still nearly 40% down from the all-time high reached in August of this year.
There are three main catalysts that have driven the price of Ethereum this week.
First, the price of Ethereum rose because the supply of tokens held on various exchanges continued to decline, reaching its lowest level in several years.
Data shows that exchange reserves have sharply fallen from 20.9 million recorded at the beginning of July to 16.8 million at the time this news was written. When exchange supply falls, it means there are fewer tokens left to be sold immediately, and thus, this reduces immediate selling pressure and generally benefits upward price momentum.
Secondly, the community spirit surrounding the upcoming Fusaka upgrade for Ethereum, which may be scheduled for December 3rd, has also driven the price of the altcoin. This upgrade will be the largest update to the network since "The Merge" and is expected to address data availability for rollups, one of the most pressing bottlenecks in the network.
Third, the return of capital inflows into Ether spot ETFs also plays a role in supporting the bullish shift. Data from SoSoValue shows that nine US ETH spot ETFs recorded $236 million in net inflows so far this week, after three consecutive weeks of outflows that saw $1.7 billion leave the funds.
Ethereum Price Analysis
On the daily chart, the price of Ethereum has broken through the falling wedge pattern, a structure that forms when the price of an asset creates lower lows and lower highs consecutively while trading within what appears to be two converging and declining trend lines.
A breakout of such patterns usually indicates an early sign of a trend shift from bearish to bullish.
Currently, $3,096, the 200-day moving average, which has kept prices in check since early November, is forming the next key resistance. A break above this level could trigger a rally towards $3,600, a zone that closely aligns with the 61.8% Fibonacci retracement level drawn from the latest swing high to the swing low.
The significance of this level lies in its role as a pivot point where significant price reactions tend to occur, often attracting new buying interest from traders watching for confirmation of a broader trend reversal.
However, the failure to hold the $3,000 support is likely to lead to a fall towards $2,750, the next key support level, which aligns with the 38.2 percent Fibonacci retracement level.
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