Ethereum's impressive rally has continued, taking the cryptocurrency to its highest in seven months, at $3,745.
The second-largest cryptocurrency by capitalisation has risen 27 per cent in the last week, thanks to increased buying by investors and increased confidence in the market.
On-chain data shows that Ethereum's balance on exchanges has declined by more than 317,000 ETH since the beginning of July. This massive withdrawal, amounting to more than $1.18 billion, indicates a strong belief by investors that prices will continue to rise.
The bullish pressure has grown as demand has increased and supply has decreased.
The main driver of Ethereum's recent rise has been this hoarding trend, with more and more users moving their ETH from exchanges to private wallets.
The price movement suggests that investors believe in an imminent breach of the key $4,000 psychological level.
However, this rapid ascent may be nearing an exhaustion point.
Ethereum's NUPL (Network Value to Transactions) ratio is approaching the so-called "Belief-Denial" zone, historically associated with profit-taking by many investors - and thus short-term corrections.
In the past 16 months, NUPL has often anticipated temporary price declines in similar situations. This means that, if investors start selling to cash in on gains, we could see a cooling phase in the market.
At the time of writing, Ethereum is still only 6.8% away from reaching $4,000.
During previous bullish cycles, this level has been an important resistance. If it is not breached, the price could fall towards $3,530.
If this support also gives way, losses could extend as far as $3,131, reversing recent gains and confirming a short-term bearish reversal.
Conversely, further accumulation could invalidate the downside scenario. Should Ethereum manage to break through $4,000, the bullish trend would strengthen further, potentially paving the way for new short-term highs.
In the end, ETH's next move will depend on a delicate balance between investor confidence and the temptation to monetise gains. The next few days will be crucial to understand whether Ethereum will continue to rise or if a correction is on the way.
