Ethereum has formed an inverse head-and-shoulders technical pattern pointing to a bullish target of 4,400 dollars. Analyst Ananda Banerjee highlights that the success of this move depends on maintaining the Ethereum on-chain support at the critical 3,150 dollar zone. This structure suggests a trend reversal after a period of stagnation in the digital asset market during the close of 2025.
To reach this goal, the asset must first overcome the resistance located at 3,400 dollars, which acts as the pattern’s neckline. The ninety-five percent reduction in selling pressure from long-term holders is a determining factor in this setup. According to Glassnode data, the volume of ETH sold by this group dropped from 1.1 million to just 54,427 tokens in less than a month. Likewise, the exhaustion of the available supply suggests that the market is ready for a significant and sustained price expansion soon.
On the other hand, cost basis data reveals an important supply wall between 3,150 and 3,173 dollars. In this range, approximately 2.94 million ETH were acquired, making this zone a fundamental pivot for the bulls. Overcoming this price barrier would allow the currency to strongly attack the psychological resistance level of 3,400 dollars. In this way, the path towards new local highs would be cleared of the heaviest selling obstacles previously accumulated by the market.
The phenomenon of supply exhaustion and its impact on market recovery
Furthermore, the inverse head-and-shoulders pattern is known for attracting strong follow-through when the breakout is decisive. If Ethereum manages to close above the neckline, the projected move would equal the height of the technical structure recently identified by experts. However, the stability of the current market depends on the strength of accumulation levels detected by various analysts. Therefore, the zone between 3,150 and 3,173 dollars remains the primary battlefield for investors today.
On the other hand, the importance of this milestone lies in the fact that flat necklines tend to generate more powerful impulses. Once the initial resistance is overcome, the next significant supply zone appears near the 3,480 dollar mark according to the charts. It is also notable that institutional interest could be renewed if the technical structure is officially confirmed on the daily charts. However, market sentiment must accompany the breakout to avoid a bull trap at higher price levels.
Will supply scarcity drive Ethereum’s value forward in the absence of sellers?
Despite the optimism, there are latent risks that could invalidate the bullish setup if the price loses momentum. A drop below 2,800 dollars would weaken the structure, while losing the 2,620 dollar level would confirm the sellers’ control. Therefore, maintaining the average cost basis at current support levels is vital for the growth prospects of the network. Thus, the market for the leading criptomoncies in smart contracts finds itself at a decisive turning point.
Finally, the exhaustion of supply by long-term holders is a historical signal of a trend change. Investors should closely monitor the behavior of volume in the breakout zone to validate the strength of the move. Therefore, the weekly close above thirty-four hundred dollars would mark the official start of the race towards the 4,400 dollar target. The future outlook looks promising if network factors and charts continue to align harmoniously during the end of the year.
