Exchange ETH holdings drop to historic lows
Ether stored on centralized crypto exchanges has reached its lowest point since the network launched in 2015. According to Glassnode data, ETH exchange balances fell to just 8.7% last Thursday, then remained at 8.8% on Sunday. That’s a pretty dramatic drop when you think about it.
Since early July, the amount of ETH on exchanges has declined by 43%. That timing lines up with when digital asset treasury purchases started ramping up. It makes you wonder if institutional buying is really starting to take hold.
Where is all the ETH going?
Analysts point to several places where ETH is being pulled away from exchanges. Staking is one obvious destination—people are locking up their ETH to earn rewards. Then there’s restaking, which has become quite popular lately. Layer-2 activity is another factor, with more ETH moving to scaling solutions.
Digital asset treasuries are buying and holding, collateral loops are using ETH as backing, and long-term custody solutions are keeping coins off the market. When you add it all up, there’s less ETH available for trading.
Compared to Bitcoin, which has 14.7% of its supply on exchanges, ETH looks particularly tight. That difference might matter more than people realize.
Technical signals and price action
Analyst Sykodelic noted an On-Balance Volume breakout above resistance recently. The price got rejected, but that’s apparently a classic divergence signaling hidden buying strength. These patterns often come before upside moves.
The price action itself looks bullish to some observers. Ether has mostly stayed above $3,000 for the past five days, though it couldn’t break through $3,200 resistance. Currently, it’s consolidating around $3,050.
What’s interesting is the ETH/BTC pair breaking above its downtrend line last week. That might suggest ETH is starting to outperform Bitcoin, which hasn’t happened consistently for a while.
Potential implications
With less ETH available on exchanges, any significant buying pressure could create a supply squeeze. When there aren’t enough sellers to meet demand, prices can move quickly. It’s basic economics, really.
But I should be cautious here—just because supply is tight doesn’t guarantee higher prices. Market sentiment, broader economic conditions, and regulatory developments all play roles too.
The macro investment research feed “Milk Road” called this ETH’s “tightest supply environment ever.” That’s strong language, but the data seems to support it. Whether this translates to sustained price momentum remains to be seen.
What strikes me is how different this feels from previous cycles. The ecosystem has matured, with more legitimate use cases beyond speculation. Staking, DeFi, and layer-2 networks are actually being used, not just talked about.
Still, markets can be unpredictable. Low exchange balances might set the stage for volatility, but direction isn’t guaranteed. It’s worth watching how this develops over the coming weeks, especially with institutional interest apparently growing.
