After losing 68% of its value from its October 2025 peak, the supply and demand picture for Ethereum is quietly turning. Here is what the analysis shows.
A little background on Ethereum
Ethereum is the second largest cryptocurrency by market capitalisation and in many ways the most important one after Bitcoin. Where Bitcoin was designed primarily as a decentralised store of value — digital gold — Ethereum was built as a programmable blockchain. It is the infrastructure layer on which a vast ecosystem of applications runs: decentralised finance, smart contracts, token issuance, NFTs, and much of the Web3 world.
That utility gives Ethereum a different character from Bitcoin. Its price is tied not just to broad crypto sentiment but to genuine demand for the network itself — fees paid by developers and users to process transactions on the blockchain. When that ecosystem grows, demand for ETH grows with it. When crypto sentiment turns negative and activity slows, ETH tends to fall harder than Bitcoin. That pattern has played out clearly over the past year.
A 68% drawdown — and what caused it
From its peak in October 2025, Ethereum has lost approximately 68% of its value. That is a severe drawdown even by crypto standards, and it has shaken out a large number of holders who bought in during the latter stages of the bull market. The selling that drove that decline was not uniform — and that distinction matters enormously for understanding where we are now.
The chart tells a clear story. The heaviest, most volume-backed selling took place between October 2025 and approximately March 2026. This was genuine distribution — large participants offloading positions into a weakening market, driving price lower with sustained selling pressure. The Supply/Demand indicator (SD), which measures the balance of buying and selling volume, confirmed this: it was deeply negative throughout this period, tracking well below its zero line.
But the character of the selling changed after March 2026. The price drop from May to June 2026 — which looked alarming on the price chart alone — was accompanied by noticeably lighter selling volume. The SD indicator began to recover. What looked like continued decline was, from a volume perspective, something quite different: the heavy sellers had largely finished. What remained was price drifting lower on diminishing supply rather than being driven down by active distribution.
“The difference between a market being sold and a market drifting lower on thin volume is enormous — even when the price chart looks similar. One signals ongoing distribution. The other signals that the selling has run its course.”
Reading the MACD and supply/demand indicator together
The weekly chart shows three MACD signals worth examining, because they illustrate exactly why using the MACD alone — without a volume-based filter — leads to poor decisions.
In May 2025 the MACD generated a buy signal, crossing up from a position well below its zero line. Taken in isolation this looked marginal — the MACD was still deeply negative. But the supply and demand indicator at that point was only marginally below its own zero line. The divergence between the two told you that buying pressure was present and the MACD signal was worth taking. Price subsequently rallied to new highs.
In October 2025 the MACD gave another buy signal. This time however the supply and demand indicator had already begun to deteriorate — it was turning down even as the MACD crossed. That divergence was a warning. The MACD was showing price momentum turning up, but the underlying volume balance was not confirming it. The correct read was to ignore that signal. The subsequent price decline proved it right.
In April 2026 a third MACD buy signal appeared. Again the supply and demand indicator was still trending down. The volume picture had not yet stabilised. Another signal to leave alone — and again the price continued lower after it.
The current picture is different. Since the low in mid-2026 the supply and demand indicator has stopped falling and is beginning to recover toward its zero line. Accumulation is underway. The heavy selling is behind us. The indicator is doing what it did ahead of the May 2025 opportunity — building a base from which the next MACD signal, when it comes, will carry genuine conviction.
Why Ethereum may be ready to follow Bitcoin
Ethereum has historically followed Bitcoin’s lead on major moves — lagging it slightly on the way up, often falling harder on the way down. Bitcoin’s own supply and demand picture has been showing accumulation for several months. If Bitcoin begins a sustained move higher, Ethereum — sitting at a 68% discount from its highs with accumulation already underway — is well positioned to follow, and potentially with greater force.
This does not mean the move is imminent or guaranteed. Accumulation takes time to complete and the timing of any breakout is never precise. But the combination of a major drawdown, completed heavy selling, light-volume price drift and a recovering supply and demand indicator is as compelling a setup as this market has offered in several years.
The biggest volume-backed selling in Ethereum is most likely behind us. What comes next — if the accumulation picture continues to develop — could be significant.
This analysis is for educational and informational purposes only and does not constitute financial advice or a recommendation to buy or sell any asset. All trading and investment carries risk including the risk of total loss of capital. Do your own research and never invest more than you can afford to lose.
More crypto and market analysis on the blog
Supply and demand analysis applied to crypto, stocks and the broader market — published two to three times a week.Read more