Ethereum Price Surges 5% as Supply Shock Signals Tightening Market

The recovery marks one of the strongest rallies in recent weeks, driven by improving technical indicators, renewed ETF inflows, and rising expectations of a potential supply squeeze on exchanges.

The recent push higher follows a prolonged consolidation period marked by softer demand and repeated attempts to break resistance levels. The new upward momentum is reflected across multiple technical gauges: one-day summaries across oscillators and moving averages show a clear buy bias, with scores favoring upward continuation. Ethereum’s four-hour RSI has rebounded from oversold territory and now hovers near the upper range, showing strong buying activity without yet signalling clear exhaustion.

Meanwhile, the MACD trend has flipped positive, pushing fresh bullish momentum after weeks of sideways pressure — reinforcing the improving market tone.

Derivatives positioning played a defining role in the breakout. Over the past 24 hours, more than $69 million in ETH positions were liquidated, with short traders bearing most of the damage. Roughly $56 million of shorts were closed compared to under $13 million in longs, meaning bears were forced to buy back aggressively — helping accelerate the upside surge.

ETF Demand Returns After Two-Day Pause

A key catalyst has been the resurgence in spot Ethereum ETF inflows. Data shows that after two consecutive days of outflows, institutional demand returned on December 8, with combined flows turning positive again. This reversal suggests investors are stepping back into the market aggressively, coinciding with the price rebound and supporting the view that sentiment around ETH is stabilizing.

Fund flow patterns also hint at something deeper happening in the ecosystem. While some issuers recorded modest activity, the broader trend reflects investors buying dips rather than exiting positions — a behavior typically associated with bullish continuation phases.

Growing Supply Pressure Narrative

Analysts are increasingly highlighting tightening exchange balances. Market commentator Crypto Rover drew attention to ETH holdings on centralized platforms trending lower, implying fewer tokens are available for active trading. This “supply shock” narrative has gained traction across social media, with charts signaling that exchange-controlled ETH reserves are declining while demand indicators strengthen.

A shrinking liquid supply paired with rising bid-side interest often amplifies volatility to the upside — and current market behavior appears to be aligning with that thesis.

Ethereum’s Market Structure Remains Constructive

On price charts, Ethereum has been forming higher lows despite broader market uncertainty. The latest breakout builds on that structure and positions the asset to challenge higher resistance levels if demand persists. Analysts are watching $3,300–$3,400 as a psychological region where momentum may face a test, while $3,000 now acts as a short-term support buffer.

Traders continue to speculate that Ethereum’s performance could accelerate as liquidity migrates from Bitcoin ETFs toward yield-bearing smart-contract assets and tokenization-aligned platforms. For now, technical strength, renewed institutional participation, and shrinking supply dynamics have positioned Ethereum as one of the stronger large-cap performers moving deeper into December.

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