Ether Supply on Exchanges Hits All-Time Low, Sparking Supply Squeeze Speculation

Ether Supply on Exchanges Falls to Record Low, Raising Supply Squeeze Hopes

As the amount of Ether (ETH) held on centralized exchanges plummets to an unprecedented low, excitement builds over the potential for a significant supply squeeze in the market.

Key Takeaways:

Ether exchange balances have sunk to a record low of 8.7%, a 43% decrease since July.
Increased staking, layer-2 activity, decentralized asset treasury (DAT) utilization, and long-term custody are restricting available liquid supply.
Analysts are detecting signs of underlying buying strength that could suggest upward market momentum.

Recent data from Glassnode reveals that exchange balances of ETH fell to 8.7% of the total supply last Thursday, the lowest percentage recorded since Ethereum's inception in 2015. This trend continued over the weekend, remaining steady at 8.8%.

ETH Exchange Balances Drop Dramatically as Supply Narrows

The swift decline of 43% in ETH balances on exchanges since early July aligns with a rise in digital asset purchases and heightened activity within the Ethereum ecosystem.

According to macro research firm Milk Road, Ether is “quietly entering its tightest supply environment ever,” while highlighting that Bitcoin's exchange balance remains notably higher at 14.7%.

Experts attribute this shift to a transformation in how ETH is utilized. More tokens are being directed toward staking, re-staking protocols, layer-2 networks, DAT balance sheets, collateralized DeFi positions, and secure self-custody. These usages typically do not return supply to exchanges.

“Though sentiment currently feels negative, it does not dictate supply,” Milk Road stated. “When that gap narrows, pricing tends to follow.”

Market analysts are also seeing indications that buying power is gaining traction. Analyst Sykodelic noted an On-Balance Volume (OBV) breakout above resistance levels late last week, despite prices not yet reflecting this shift.

This divergence is seen as a traditional marker of “hidden buying strength,” often occurring before upward price movements.

“This indicates buying strength, and usually, the price reacts accordingly,” the analyst remarked but added a note of caution that these indicators are not foolproof.

They concluded that the overall price action appears “bullish,” suggesting that ETH could reach higher levels before experiencing a substantial pullback.

Ether Stays Above $3,000 as Market Momentum Builds

Ether has managed to stay above the $3,000 threshold for nearly a week, though it still struggles with resistance around $3,200. Over the last 24 hours, ETH has been consolidating near $3,050, reflecting the indecisiveness observed across the broader market.

The ETH/BTC trading pair drew attention last week after successfully breaking above a long-term downtrend, a movement that some traders interpret as a sign that capital is beginning to flow back into Ethereum.

In the meantime, BitMine Immersion Technologies—now the largest corporate holder of Ether—has aggressively continued to buy the dip, even as other key traders prepare for potential market drop-offs.

The firm has acquired an additional $199 million in ETH over the past couple of days, significantly boosting its growing reserves.

BitMine now possesses $11.3 billion worth of Ether, equating to approximately 3.08% of the total supply, and is approaching its ambitious goal of accumulating 5%.

Last month, Tom Lee highlighted that Ether might be on the brink of entering a growth cycle reminiscent of Bitcoin’s meteoric rise, which saw a 100x increase since 2017.

Lee remarked that the current conditions surrounding Ether mirror Bitcoin's situation eight years ago, a time marked by significant volatility that ultimately led to one of the most robust bull cycles in the history of cryptocurrencies.