Ethereum [ETH] has traded at relatively low levels since February, remaining below its overall cost basis of $2.3k. With more holders in loss and the latest rally to $1,920 followed by another move lower, sellers have continued to hold the upper hand in the market.

AMBCrypto previously reported that Ethereum’s realized price bands suggest a decline to $1.15k remains possible if the 2022 bear-market cycle repeats. Realized price is often used as an on-chain cost-basis measure, so trading below it signals that the average coin is being held at an unrealized loss.

Although ETH may be viewed as cheap relative to its realized price, spot ETF outflows of $70.7 million on Friday, July 24, ended a five-trading-day inflow streak that began on July 16. AMBCrypto warned that stalled momentum could signal the continuation of a bearish trend.

At the same time, some on-chain indicators pointed to organic growth and lower speculative excess.

On-chain signals point to lower Ethereum downside risk

XWIN Japan noted that Ethereum Exchange Reserves declined from 5 million ETH in mid-2025 to 3.8 million ETH at the time of writing. The decline indicated holder accumulation and reduced selling pressure across the market, as fewer coins sitting on exchanges can reduce the amount of immediately available supply for sale.

Ethereum’s market price also remained below its realized price, creating conditions that may be favorable for long-term investors seeking to buy the leading altcoin at lower valuations.

However, XWIN Japan cautioned that falling Exchange Reserves alone do not confirm that a final market bottom has formed. This matters because exchange balances can show supply positioning, but they do not capture all demand-side conditions or macro factors that may influence price.

Crypto analyst Crypto Onchain wrote that Ethereum had been quiet over the past quarter. Median transaction fees, for example, were 92% below the 90-day average. Over the past week, however, those fees increased by 16%.

New smart contract deployments also climbed 190% compared with the 90-day baseline, while median tip fees rose 86%. The rise in contract deployment and tips pointed to genuine short-term on-chain demand and activity, since contract creation and higher priority fees typically reflect users competing for blockspace.

Leverage, meanwhile, remained restrained. Funding rates were cooling on Binance, and Open Interest had fallen from $15.06 billion at the start of June to $11.85 billion at press time. Lower Open Interest can indicate less exposure through derivatives, reducing the risk that price moves are driven mainly by crowded leveraged positions.

If the recent short-term increase in activity continues while leverage remains under control, a price increase driven by organic demand could be viable.

Overall, Ethereum remained cheap compared with its realized price, while declining exchange reserves pointed to steady accumulation. The recent increase in smart contract deployments and median tips, combined with subdued leverage, remained a set of metrics for investors to monitor.