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Note that Ethereum’s price action has not generated much confidence recently. The price has been almost constant in the last 24 hours and is still more than 5% in the last seven days. However, a small recovery attempt is now underway. Since February 19, Ethereum has recovered by about 4.5%, thanks to a positive divergence on the daily chart.
This signal usually indicates that selling pressure is weak. However, the sharp drop in demand for storage raises a new question. Will the quiet return of liquidity build pressure against this recovery?
A bullish divergence is emerging, but declining storage demand may restore supply
Ethereum’s recent recovery began after a positive divergence formed between February 15th and February 19th. Positive divergence occurs when the price makes a lower low while the Relative Strength Index (RSI) makes a higher low. The Relative Strength Index is a momentum indicator that shows whether buying or selling pressure is stronger.
An improvement in the RSI during a falling price often indicates a decrease in the strength of the sellers, and this allows the recovery to begin. That is why Ethereum was able to recover from the low of February 6 near $1,740 and climb towards $1,970, at the time of writing.
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However, while the chart indicated a recovery, Ethereum storage data, compiled exclusively by BeInCrypto analysts, began to show the opposite trend.
Storage means locking ETH in the network to help secure Ethereum and earn rewards. When looking at ETH, the supply of liquid decreases because these coins cannot be easily sold.
When demand decreases, that supply returns to the market and the risk of selling increases.
Cumulative 6-month net Ethereum storage deposits decreased from 1,994,282 ETH on January 13 to 1,008,012 ETH on February 22. This represents a decrease of about 986,000 ETH, or about 50%.
This sharp decrease indicates that the amount of ETH absorbed in the storage has become much less. This allows more ETH to be liquid or available in the market. This creates a direct conflict.
The upside deviation explains that there is potential for a recovery, but a decrease in storage demand indicates that liquidity is returning to the market. So the main question becomes clear.
Ask the question: Where is this ETH return?
Stock market balances and whale sales show that liquidity is already on the move
Platform balance sheet data provides the first clue. Ethereum balances on exchanges recently increased from 14,241,203 ETH to 14,586,720 ETH. This means an increase of about 345,500 ETH, or about 2.4% in a short period of time.
Platform balances measure the amount of ETH available on trading platforms. When this number increases, it usually means that more ETH is available for sale.
This level is important because it is identical to the levels last seen on February 4th.
At this time, the price of Ethereum fell sharply from $2,140 to $1,820 in a single day, a drop of almost 15%. This shows how high supply on platforms can quickly turn into sales pressure.
The timing also corresponds closely to the decrease in storage, confirming that the reduction in storage demand contributes to the increase in liquid supply.
It shows the behavior of whales Support this trend. Whales are great holders whose transactions can influence the direction of the price. Since February 19, whale assets have decreased from 113.65 million eth to 113.42 million eth.
This means that about 230,000 eth were sold by whales in just three days. This sale happened at a time when Ethereum was trying to recover.
This data suggests that instead of supporting the recovery, whales could use increased liquidity to reduce their positions. The combination of increasing platform balances and selling whales reveals that liquidity is not only back, but is already creating resistance.
Our cost analysis on the chain now explains where this resistance may be. Base cost refers to the price levels at which investors purchased ether. When prices return to these levels, many holders attempt to sell at a loss, creating resistance unless a new reason to hold emerges.
This data comes from the UTXO Realized Price Distribution or URPD. Although Ethereum uses a counting system, this metric has been adapted to estimate the distribution of the Ethereum supply.
The data shows that more than 2% of Ethereum’s supply is concentrated between $2,020 and $2,070. These levels are also tight with the resistance levels on the Ethereum price chart.
This creates a critical test. If Ethereum’s recovery continues, it must first break above $2,050 and then challenge the $2,140 level. A stronger move could extend towards $2,300.
But due to supply concentration near $2,020 and $2,070, many holders may sell as ETH approaches these levels. This makes the $2,050 area the most important in the short term.
With the demand for storage decreasing and whales already selling, absorbing this supply (if released when the price reaches a key level) becomes difficult in the absence of a new strong demand.
On the downside, the main support level is located at $1,890. This level is located about 4% below the current price. If this support fails, Ethereum could fall back towards its February low near $1,740.
This puts Ethereum in a risky position. Growing divergences have opened the door for recovery. But declining storage demand, rising platform balances, whale sales and strong price resistance suggest that returning liquidity may determine what happens next.
