Ethereum (ETH) is approaching a crucial resistance level at $3,000 after gaining 45% in May. On-chain metrics suggest strong support for the bullish trend as institutional investors accumulate ETH and exchange balances decline. These conditions indicate a possible price move toward $4,000 in the coming weeks.

Whale Accumulation Boosts Ethereum Price Outlook

On-chain data from Nansen shows increased activity from experienced crypto investors. The number of smart money wallets holding Ethereum has risen from 1,670 in April to 1,922 in May. These wallets now hold over 123,600 ETH, up from 86,709 a month earlier. Such wallets are typically linked to institutions or early crypto adopters who manage large portfolios.

According to Nansen, this group began accumulating ETH after prices dropped to $1,380 in April. The trend continued into May, contributing to the current price rally. Market observers use smart money flows as a reliable signal of future price action because these entities often act before retail investors.

Whale behavior is often viewed as a leading indicator. Their increasing ETH holdings suggest confidence in future price appreciation. The timing of their accumulation aligns with Ethereum’s recent surge, reinforcing the possibility of further gains.

Ethereum Supply on Exchanges Declines Sharply

Data from CoinGlass shows that the amount of Ethereum held on exchanges dropped from 15.75 million on April 25 to 15.15 million by May 14. When coins move off exchanges, they are typically transferred to cold storage or staking, reducing the available supply for trading.y

Lower exchange balances indicate reduced selling pressure. This pattern has historically supported bullish momentum for major cryptocurrencies. Investors are more likely to hold during price rallies when fewer coins are available to sell on exchanges.

At the same time, ETH staking activity is rising. Over 309,000 ETH, worth approximately $813 million, have been deposited into staking contracts in the past 30 days. These coins are locked, further tightening market supply. This behavior suggests investor confidence in long-term returns.

Technical Indicators Suggest Further ETH Upside

Technical charts show Ethereum is forming a bullish structure. The price has moved above the $2,121 resistance level, invalidating a possible break-and-retest pattern. This development points to strong bullish momentum.

The daily chart reveals Ethereum is close to forming a golden cross. This occurs when the 50-day and 100-day moving averages converge and cross upward. A golden cross typically signals upward momentum in the short term. The Average Directional Index (ADX) reading has also reached 36, confirming a strong trend.

Analysts now see a potential push to $3,000 soon. If this resistance turns into support, the path to $4,000 becomes more likely. However, Ethereum may face a retracement before this next leg.

Retracement Possible Before Ethereum Hits $4,000

Despite the bullish setup, technical indicators point to possible short-term weakness. The Relative Strength Index (RSI) is in the overbought zone, showing a bearish divergence. The RSI has made a lower high while the price has made a higher high. This divergence often leads to a price correction.

A retracement could see ETH test the support zone between $1,872 and $2,069. This zone is a weekly bullish breaker and could provide a buying opportunity for long-term holders. A successful bounce from this area may reset technical indicators and allow bulls to regain momentum.

A confirmed break above $3,000 could push ETH to test the $4,093 level. This area has acted as resistance before and contains liquidity that may attract buying pressure. On the downside, a drop below $1,872 would signal the first major weakness. A close below $1,700 could confirm a bearish reversal and increase the risk of a decline to $1,500.

Ethereum Maintains Bullish Momentum with On-Chain Support

Ethereum remains to enjoy sound fundamentals and positive market confirmation. Whale accumulation, lower exchange balances, and the increase in staking indicate the decrease in selling pressure. Technical indicators indicate a strong trend, but it is possible for a pullback.

The market participants should be on the watch-out for critical support and resistance levels, as they monitor updated on-chain data. Ethereum’s current formation can serve as an example for other digital coins if it manages to sustain momentum and head towards the level of $4,000 in the short term.