Key takeaways:

• Declining ETH supply on exchanges signals a potential rally in the making.

• Ethereum weekly DEX volume jumped 47% reflecting improving sentiment.

• Historical data shows ETH price gains 4.77% on average.

Ether (ETH) price climbed back above $4,000 on Monday, after a 3.5% climb over the last 24 hours. This recovery has sparked hopes of ETH resuming its bull run in October, backed by several onchain, historical and technical data.

Declining ETH supply on exchanges

As Cointelegraph reported, Ether supply on centralized exchanges has dropped to its lowest point since 2016, driven by growing institutional accumulation.

CryptoQuant analyst CryptoMe points out three reasons why ETH reserves on exchanges are dropping:

• Investors withdrawing into self-custody;

• Moving ETH to staking or exchanges;

• Transfers to a new wallet.  

Total Ethereum exchange outflows are also on the rise. These outflows are now at levels seen during the late phases of the 2022 bear market when quantitative tightening was at its “hottest point,” wrote CryptoMe in a Quicktake analysis on Saturday.

Related: Ether ETFs log straight week of outflows, $796M pulled as price drops 10%

Following that, the FTX crisis led to a significant number of ETH tokens being withdrawn from exchanges.  

“Is ETH about to boom?” the analyst asked, adding:

“When demand triggers, the rally starts. Falling reserves prepare the ground for that rally.”

Ethereum DEX volumes jump 47% in a week

Bullish sentiment is also reflected in a 47% weekly leap in decentralized exchange (DEX) activity on the Ethereum network.

DEX volumes on Ethereum are up 47% in the last seven days to $33.9 billion from $22.9 billion the week prior, a trend that was also seen in its layer-2 solutions like Base, Arbitrum, and Polygon.

The market recovery was modest among Ethereum competitors, with Solana’s DEX activity increasing by 6% and BNB’s by 8.3%.

Ethereum’s positive volume trends include a 30% growth for Maverick Protocol and a 26% rise for Uniswap compared to the previous week. 

Increasing DEX volume on Ethereum has historically been accompanied by price growth amid increasing onchain demand for ETH. For example, ETH price nearly doubled during the 276% increase in weekly DEX volume to $40 billion record highs between June 30 and Aug. 14.

Ether price to see “pump” in October?

ETH/USD lost 6% in September, which aligns with historical price behavior, according to data from monitoring resource CoinGlass.

October, however, averages 4.77% gains, which would imply ETH price rising closer to $4,300 from the current levels.

“Ethereum monthly returns (USD history show a clear pattern that October and beyond is a bullish season,” crypto analyst Marzell said in an X post last week, adding:

“October is often the ignition… get ready for the Q4 $ETH pump!”

Fellow analyst Midas similarly anticipated a very bullish Q4 based on past performance.

“ETH is repeating the same Q3 2020 pattern,” Midas said in an X post on Monday, adding that the last time such a performance was followed by more than 100% gains in Q4.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.