The price of Ethereum has not instilled much confidence lately, even though it has remained stable over the past 24 hours. Over the past seven days, it has decreased by more than 5%. However, there has been a slight recovery effort since February 19, with Ethereum recovering about 4.5% due to bullish divergence on the daily chart.
This signal often indicates that selling pressure is weakening, but at the same time, the rapid decline in staking demand is raising new questions. Is the returning liquidity to the market quietly pressuring this recovery trend?
An upward signal appears, but decreasing staking demand may lead to a supply return.
This latest rebound of Ethereum began after a bullish divergence between February 15 and February 19, where bullish divergence occurs when the price drops below a previous low while the Relative Strength Index (RSI) makes a higher low. RSI is a momentum indicator that shows stronger buying or selling pressure.
When the RSI improves while the price drops, it often indicates that selling pressure is weakening, leading to a rebound. This is why Ethereum can recover from the low on February 6, near $1,740, back up to about $1,970 at the time of reporting.
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However, even though the chart shows signs of recovery, the staking data for Ethereum compiled by BeInCrypto specifically shows a contrary trend.
Staking refers to locking ETH in the network to help secure Ethereum while earning rewards. When ETH is staked, the amount of ETH available for immediate trading in the market decreases because those coins cannot be easily sold.
However, as staking demand decreases, coins returning to the market will increase, leading to an immediate higher risk of selling pressure.
Net deposits in Ethereum staking over six months have decreased from 1,994,282 ETH on January 13 to 1,008,012 ETH on February 22, a reduction of about 986,000 ETH or nearly 50%.
This decline shows that significantly fewer ETH are being staked, resulting in the remaining ETH in the market being more liquid or more available for sale, which directly conflicts with the previous trend.
Bullish divergence signals a recovery trend, but as staking demand decreases, it indicates that liquidity is returning. Thus, the important question becomes clearer.
Where is this returning ETH going?
The balance on exchanges and whale selling reveals that liquidity has started moving.
Exchange balance data gives the first clue that ETH on exchanges has increased from 14,241,203 ETH to 14,586,720 ETH. This is an increase of about 345,500 ETH or approximately 2.4% in a short time.
The balance on exchanges is an indicator of how much ETH is available for trading on the platform. If this number increases, it typically means more ETH is coming in for sale.
This level is particularly significant as it corresponds with the level last seen on February 4.
At that time, Ethereum's price plummeted rapidly from $2,140 to $1,820 in one day, reflecting a nearly 15% drop, which indicates that the increase in supply on exchanges can become selling pressure very quickly.
This timing also aligns with the trend of decreasing staking demand, making it clear that the reduction in staking is leading to a higher supply of liquidity.
The behavior of ETH whales is also promoting this trend, as whales refer to large holders who can influence price direction. From February 19, the holdings of whales decreased from 113.65 million ETH to 113.42 million ETH.
This means that whales sold about 230,000 ETH in three days, occurring while Ethereum was trying to recover.
This indicates that large holders may be using increased liquidity or reducing their positions instead of supporting recovery, as the balance on exchanges increases along with the selling behavior of whales, indicating that liquidity is not just returning but is clearly becoming a resistance.
The buying cost group illustrates why Ethereum's price is struggling to recover immediately.
Current on-chain average cost data helps explain where resistance will occur, as average cost refers to the price at which investors previously purchased ETH. When the price returns to this point, many holders attempt to sell at break-even costs, resulting in resistance if there are no new incentives to hold.
This data comes from the UTXO Realized Price Distribution (URPD) indicator. Although Ethereum uses an account-based system, this indicator has been adjusted to estimate the distribution of Ethereum's supply.
It shows that over 2% of Ethereum's supply is clustered between $2,020 and $2,070. These levels also align with resistance on the Ethereum price chart.
This creates an important test; if Ethereum's recovery continues, the price must break above $2,050 first and then challenge the $2,140 level. If the price moves up strongly, it could expand to $2,300.
But due to the clustered supply near $2,020 and $2,070, there is a chance that many holders will sell ETH as the price approaches these levels, making $2,050 the most crucial zone in the short term.
As staking demand decreases and whales sell off, this absorption of supply (if unlocked when the price touches key levels) becomes difficult without strong new buying pressure.
Below, the key support level is at $1,890, which is about 4% lower than the current price. If this level breaks, Ethereum may retreat to the February low near $1,740.
For this reason, Ethereum is in a precarious position because bullish divergence has opened the opportunity for recovery; however, decreasing staking demand, increasing exchange balances, whale selling, and strong resistance at the cost basis all indicate that the returning liquidity may determine the direction moving forward.