Key Takeaways
Why does Ethereum start Q4 bullish?
Strong on-chain flows, record stablecoin supply, and a historic supply squeeze are fueling Ethereum’s spot demand and reinforcing bids under key support levels.
What key level should traders watch?
$4.5k is key as ETH looks set for a potential third higher low, setting the stage for a breakout toward $5k.
Ethereum’s [ETH] Q4 breakout isn’t going to be smooth sailing.
Last cycle, Bitcoin [BTC] outperformed ETH by nearly 2x, so BTC dominance remains a key headwind. Institutional players are already positioning for a repeat run, with capital flowing heavily into BTC ETFs.
Technically, ETH is at a make-or-break point. Over the past week, it’s put in two higher lows, each followed by a clean resistance break. Now, a similar move around $4.5k is key to spark FOMO and draw in fresh buyers.
Source: TradingView (ETH/USDT)
Notably, stablecoin supply on Ethereum hit a record $172 billion.
Data from RWA.xyz shows stablecoins on ETH are up 44% this year, with almost $1 billion added in October alone. That pushed ETH Total Value Locked (TVL) up 6.37% to $167 billion, taking it back to 2021 level.
In short, ETH kicked off Q4 with liquidity flowing back into the L1. After a -5% dip in September, it looks like investors are rotating back in and stacking fresh positions, reinforcing a solid on-chain setup.
Ethereum supply hits historic low amid rising demand
On-chain data from CryptoQuant strongly supports the bullish thesis.
In the past week, around 18k ETH hit the market, while exchange reserves dropped to an eight-year low of 16 million, with about 183k moving off exchanges and $1.3 billion flowing into Ethereum ETFs.
The setup screams supply-demand squeeze. What’s more, 36 million ETH are already staked, so free-floating supply is getting tight. In this context, rising stablecoin supply adds plenty of dry powder for ETH spot demand.
Source: RWAxyz
In short, even though BTC usually leads Q4, ETH is keeping pace.
Its 9% rally this week isn’t random. Instead, it’s backed by solid on-chain flows, with bids holding under ETH’s two higher lows. With the supply squeeze in play, $4.5k looks set for a clean third higher low.
Therefore, on-chain and structurally, ETH is looking solid for a bullish Q4. Liquidity coming back into the network is giving it real “spot-led” muscle, making a breakout from $4.5k toward $5k feel just around the corner.