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Exchange ETH Balances Fall to Decade Lows
Centralized exchange reserves of Ether (ETH) have fallen to levels not seen since the network's early days, creating a backdrop for a potential supply squeeze. Analysts point to a sustained migration of ETH into staking, custody services and other non-sellable venues as the primary driver behind the decline in exchange liquidity.
Ether exchange balances dropped to a decade low of 8.7% as more ETH moved into staking and custody, setting up a potential supply squeeze.
The amount of Ether stored on centralized crypto exchanges is at an unprecedented low, which could result in a supply squeeze, say analysts. Ether ETH $3,041 exchange balances fell to 8.7% on Thursday last week, the lowest they have been since the network launched in mid-2015. The amount of the asset held on exchanges remained low at 8.8% on Sunday, according to Glassnode data.
Where the ETH Is Going
Since early July, on-exchange ETH balances have dropped roughly 43%, roughly coinciding with rising activity from digital asset treasuries (DATs) and increased institutional custody flows. Market observers — including the macro research feed Milk Road — note that ETH is being locked into places unlikely to produce immediate sell pressure: staking and restaking contracts, layer-2 liquidity and activity, DAT purchases, collateral loops, and secure long-term custody.
Milk Road commented: “ETH is quietly entering its tightest supply environment ever,” highlighting that this is a novel condition for the asset. For comparative context, Glassnode shows Bitcoin (BTC) exchange holdings at about 14.7%, which remains higher than ETH's share of supply on exchanges.
BTC vs ETH stored on exchanges
Technical Signals: Volume Momentum and OBV
On-chain and chart-based analysts have also pointed to bullish volume signals. Trader Sykodelic flagged a breakout in the On-Balance Volume (OBV) indicator above resistance, a momentum measure that aggregates volume flow to anticipate directional moves.
Although price saw a near-term rejection at resistance, OBV divergence can signify hidden buying strength that precedes upside moves. As one analyst noted, “This is a sign of buying strength, and typically, the price will follow. Nothing is guaranteed with indicators, but I have found that OBV tends to be one of the most reliable leading indicators.”
Ether OBV breaks above resistance
Price Outlook and Market Implications
ETH has largely held above the $3,000 level in recent trading sessions, consolidating around the $3,050 area while struggling to clear $3,200 resistance. At the same time, ETH/BTC recently broke above a downtrend line, drawing attention to Ether’s relative strength versus Bitcoin.
With a tightening supply profile driven by staking and institutional custody — and with bullish volume signals in play — markets could see stronger upward pressure if spot liquidity on exchanges fails to replenish. Traders and investors focused on blockchain fundamentals, staking yields, and exchange liquidity should monitor exchange balances and on-chain flows closely for signs of an intensifying supply squeeze.
Source: cointelegraph
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