Ether Supply Squeeze on the Horizon as Exchange Levels Hit Record Lows

The quantity of Ether held on centralized cryptocurrency exchanges has dropped to historic lows, prompting analysts to predict a potential supply squeeze.

Key Takeaways

Ether exchange balances fall to 8.7%, the lowest since 2015, indicating a substantial decline in supply.
The amount of ETH on exchanges decreased by 43% since early July as digital asset treasury purchasing surged.
The decline in Ether on exchanges may lead to increased price momentum due to reduced liquidity.
Analysts identify a bullish price action despite recent resistance at the $3,200 level.

Ether supply squeeze looms with exchanges holding lowest levels since 2015

Record Low Ether Balances on Exchanges

As of last Thursday, the volume of Ether (ETH) available on centralized exchanges dropped to 8.7%, marking its lowest level since the Ethereum network's launch in mid-2015. Data from Glassnode revealed that this figure remained low at 8.8% on Sunday.

Since the beginning of July, ETH held on exchanges has plummeted by 43%, coinciding with a rise in digital asset treasury (DAT) purchases. Investment research outlet “Milk Road” commented, "ETH is quietly entering its tightest supply environment ever," highlighting that such a situation has never been previously observed.

In contrast, Bitcoin's availability on exchanges stands at a higher 14.7%, as reported by Glassnode. The continual withdrawal of ETH from exchanges into non-liquid areas—such as staking, restaking, Layer-2 solutions, DATs, and leveraged trading—suggests that a supply squeeze could spark significant price movements.

Chart showing BTC vs ETH stored on exchanges. Source: Glassnode

Strong Buying Momentum Indicated by Volume Patterns

On Friday, analyst “Sykodelic” noted that the On-Balance Volume (OBV) indicator—used to gauge buying and selling pressure—showed a breakout above previous resistance levels. However, despite this breakout, ETH prices faced rejection, indicating a classic divergence that often signals underlying buying strength.

"With current price actions showing bullish signs, I believe we will see upward movement before any significant pullbacks,” said Sykodelic.

Ether OBV breaks above resistance. Source: Sykodelic

ETH Stays Above $3,000 Resistance Level

Despite recent fluctuations, Ether prices have primarily remained above the $3,000 mark over the past five days; however, it has struggled to surpass the resistance at $3,200. Currently, ETH is consolidating around the $3,050 range.

Of note, the performance of Ether against Bitcoin drew attention last week as the ETH/BTC trading pair broke above its downtrend line, indicating potential bullish sentiment in the market.

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