Ethereum’s Supply Squeeze Fuels Rally Amid Macroeconomic Watch

Ethereum CRYPTO000ETH

Ethereum is staging a powerful comeback, with its price trajectory being shaped by a potent combination of internal supply dynamics and external macroeconomic anticipation. As the market's focus remains fixed on the U.S. Federal Reserve, a significant withdrawal of the cryptocurrency from trading platforms is creating a foundational scarcity that is propelling its value upward.

A decisive shift is underway in Ethereum's market structure. On-chain analytics reveal that the proportion of available Ether held on centralized exchanges has plummeted to a record low of 8.7%. This mass migration of assets off trading venues is widely interpreted by market experts as a strong indicator of long-term conviction, effectively reducing immediate sell-side pressure.

Concurrently, the network is seeing substantial inflows into staking contracts, with over 40,000 ETH being committed daily. This dual mechanism—exchange withdrawals and staking lock-ups—is drastically constricting the liquid, readily tradable supply of Ethereum. The fundamental economic principle of rising prices when demand meets a shrinking available inventory is now in clear effect, contributing to a 7% surge over 24 hours that pushed the asset above the key $3,300 resistance level.

Fundamental Developments Provide Tailwinds

Beyond supply and demand mechanics, several fundamental developments are reinforcing Ethereum's position. The network's "Fusaka" upgrade, activated on December 3, is designed to enhance scalability and is projected to substantially lower costs for Layer-2 solutions by January 2026.

Furthermore, regulatory and accessibility milestones are broadening the investor base. The U.S. Office of the Comptroller of the Currency (OCC) has granted permission for national banks to engage in certain cryptocurrency transactions, specifically "riskless principal" activities, paving a clearer path for institutional capital. Additionally, the introduction of staking capabilities on the Robinhood platform is simplifying access for retail investors.

Macroeconomic Crosscurrents and Future Trajectory

The broader financial landscape remains a critical variable. Traders are positioning themselves ahead of the Federal Reserve's imminent interest rate decision, with speculation centered on a potential 25-basis-point cut or, at minimum, more dovish guidance from Chair Jerome Powell regarding the 2026 policy outlook. A shift toward a more accommodative monetary policy could funnel additional capital into risk assets, including cryptocurrencies.

Despite the recent rally, Ethereum's price remains approximately 7% lower on a 30-day basis. The asset continues to trade nearly 29% below its 52-week high of around $4,700, highlighting the theoretical room for recovery.

The immediate direction for Ethereum now hinges significantly on the Federal Reserve's communication. Should Chair Powell validate market hopes for a less restrictive policy, the confluence of acute supply scarcity and cheaper capital could solidify the current uptrend. Conversely, if the central bank delivers a hawkish surprise, the rapid price appreciation may invite profit-taking, testing the resilience of the recent gains.