Ethereum price has broken out of a bullish reversal pattern as the supply of tokens held in exchanges continued to decline to a record low.

According to data from crypto.news, Ethereum (ETH) price dropped for nearly two weeks from $3,633 recorded on Nov. 10 to its monthly low of $2,680 on Nov. 21. It has since rebounded back above $3,000, a level that analysts have noted it must hold for a possible shift in trend from bearish to bullish. Trading at $3,013, the second-largest crypto asset is up 7.3% in the past 7 days but still nearly 40% down from its all-time high hit in August this year.

There are three main catalysts that have driven Ethereum’s price this week.

First, Ethereum price rallied as the supply of tokens held across exchanges continued to decline, hitting a multi-year low.

Data from CryptoQuant shows that exchange reserves had sharply dropped from 20.9 million recorded in early July to 16.8 million at press time. When exchange supply drops, it means there are fewer tokens left to be immediately sold, and hence, this reduces any immediate selling pressure and is generally favorable for price momentum to the upside.

Second, community hype surrounding the upcoming Fusaka upgrade for Ethereum, potentially scheduled for Dec. 3, has also fueled the altcoin’s price. The upgrade would represent the network’s largest update since “The Merge” and is expected to address data availability for rollups, one of the network’s most pressing bottlenecks.

Third, returning inflows into spot Ether ETFs also played a part in supporting the bullish shift. Data from SoSoValue shows that the nine U.S. spot ETH ETFs recorded $236 million in net inflows so far this week, following three consecutive weeks of outflows that saw $1.7 billion exit the funds.

Meanwhile, ongoing accumulation from institutional players such as Bitmine also played a role in boosting trader confidence in Ethereum’s long-term outlook.

Ethereum price analysis

On the daily chart, Ethereum price has broken out of a falling wedge pattern, a structure formed when an asset’s price forms consecutive lower lows and lower highs as it trades within what appears to be two converging and descending trendlines.

A breakout from such a pattern is typically a precursor for a shift in trend from bearish to bullish.

For now, $3,096, the 200-day moving average, which has kept its price in check since the beginning of November, forms the next key resistance. A breakout from this level could trigger a rally towards $3,600, a zone that closely aligns with the 61.8% Fibonacci retracement level drawn from the recent swing high to swing low.

The significance of this level lies in its frequent role as a pivot point where major price reactions tend to occur, often attracting fresh buying interest from traders watching for confirmation of a broader trend reversal.

However, failure to maintain the $3,000 support could likely lead to a drop towards $2,750, the next key support level, which aligns with the 38.2 percent Fibonacci retracement level.