Ether Exchange Balances Reach Decade Low, Signaling Potential Supply Squeeze

ETH exchange balances have dropped to a decade-low of 8.7%, the lowest since Ethereums launch in 2015, as more Ether moves into staking and custody. This decline signals a tightening supply that could lead to a potential squeeze, according to on-chain data from Glassnode.

• ETH balances on exchanges fell to 8.7% last week, hitting a historic low.
• A 43% decline since early July coincides with increased institutional accumulation.
• Unlike Bitcoins 14.7% exchange holdings, ETH is increasingly locked in non-selling mechanisms like staking and layer-2 solutions.

What Are the Current ETH Exchange Balances？

ETH exchange balances have reached their lowest point in a decade, standing at 8.7% as of last Thursday, the smallest share since Ethereums mainnet launched in mid-2015. This figure edged slightly higher to 8.8% by Sunday, per data from Glassnode, reflecting a broader trend of Ether being withdrawn from centralized platforms. Analysts point to this as a sign of reduced selling pressure, with more ETH directed toward long-term holding strategies.

How Is the Decline in ETH Exchange Balances Impacting Supply？

The drop in ETH exchange balances represents a 43% reduction since early July, aligning with surges in digital asset treasury purchases by institutions. Macro research outlet Milk Road describes this as Ethereum entering its “tightest supply environment ever,” a level unprecedented in the assets history. ETH is increasingly funneled into non-liquidating uses, including staking, restaking protocols, layer-2 network activity, collateral in decentralized finance, and secure custody solutions, which limit available supply on open markets.

“Sentiment feels heavy right now, but sentiment doesn‘t dictate supply,” noted Milk Road. “ETH supply is tightening in the background while the market decides its next move. When that gap closes, price follows.” For context, Bitcoin’s exchange balances remain higher at 14.7%, highlighting Ethereums unique shift toward ecosystem integration over centralized storage.

BTC vs ETH stored on exchanges. Source: Glassnode

Volume Momentum Indicator Signals Buying Strength

On-chain analyst Sykodelic observed a breakout in the On-Balance Volume (OBV) indicator, a key metric for assessing buying and selling pressure through trading volume. Last Friday, OBV surpassed resistance levels while price faced rejection, creating a divergence that often foreshadows upward price movements. This pattern suggests underlying accumulation despite short-term volatility.

“This is a sign of buying strength, and typically, the price will follow,” Sykodelic explained. “Nothing is guaranteed with indicators, but I have found that OBV tends to be one of the most reliable leading indicators.” Combining this with bullish price action, the analyst anticipates higher prices before any significant correction, underscoring potential momentum in the ETH market.

Ether OBV breaks above resistance. Source: Sykodelic

ETH Holds Steady Above $3,000

Ether has maintained support above the $3,000 mark over the past five days, though it has struggled to breach resistance near $3,200. In the last 24 hours, ETH has traded in a tight range around $3,050, showing consolidation amid broader market uncertainty. Notably, the ETH/BTC trading pair broke above its recent downtrend last week, indicating relative strength for Ethereum against Bitcoin.

This resilience in price, coupled with shrinking exchange balances, points to growing confidence among holders. Data from Glassnode reinforces that the exodus from exchanges is not a sell-off but a strategic repositioning, potentially amplifying Ethereums value as network utility expands through upgrades and adoption.

Frequently Asked QuestionsWhat caused the recent drop in ETH exchange balances？

The decline in ETH exchange balances to 8.7% stems from increased staking, institutional custody, and layer-2 deployments, reducing available supply by 43% since July. This shift, tracked by Glassnode, reflects holders opting for yield-generating or secure storage over centralized trading platforms, per insights from macro analysts.

Could low ETH exchange balances lead to higher prices？

Yes, a supply squeeze from low ETH exchange balances often correlates with price appreciation, as reduced liquid supply meets steady demand. With ETH moving into staking and custody—non-selling mechanisms—analysts like those at Milk Road predict momentum once market sentiment aligns with these fundamentals, similar to historical crypto cycles.

Key Takeaways

• Historic Low Balances: ETH exchange holdings at 8.7% mark the tightest supply since 2015, driven by staking and custody trends.
• OBV Breakout: Volume indicators show hidden buying strength, suggesting bullish price action ahead despite current resistance.
• Price Stability: Holding above $3,000 with ETH/BTC gains signals resilience and potential for upward moves in the near term.