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Ether held on centralized exchanges has decreased to its lowest historical level, sparking speculation that a supply squeeze might be developing beneath the market’s surface.
Key Takeaways:
- ETH exchange balances have reached a record low of 8.7%, marking a 43% decline since July.
- Staking, layer-2 activity, digital asset treasury (DAT) involvement, and long-term custody are constricting liquid supply.
- Analysts identify concealed buying strength, suggesting potential upward movement.
As reported by Glassnode, exchange balances fell to 8.7% of the total ETH supply last Thursday, the lowest percentage recorded since Ethereum’s inception in 2015. The levels remained close to that low at 8.8% on Sunday.
ETH Exchange Balances Drop 43% as Supply Tightens to Unprecedented Levels
This significant decline represents a 43% reduction in ETH exchange balances since early July, coinciding with an increase in digital asset treasury (DAT) acquisitions and heightened activity throughout the broader Ethereum ecosystem.
Macro research firm Milk Road stated that ETH is “quietly entering its tightest supply environment ever,” pointing out that Bitcoin’s exchange balance is still considerably higher at 14.7%.
Analysts have linked this change to structural adjustments in the utilization of ETH. An increasing number of tokens are being directed towards staking, restaking protocols, layer-2 networks, DAT balance sheets, collateralized DeFi positions, and long-term self-custody, which are typically destinations that do not return supply to exchanges.
“Sentiment feels heavy right now, but sentiment doesn’t dictate supply,” Milk Road noted. “When that gap closes, price follows.”
In addition to supply metrics, market technicians are detecting indications that buyers may be gaining dominance. Analyst Sykodelic pointed out an On-Balance Volume (OBV) breakout above resistance late last week, even as price did not follow suit.
$ETH is quietly entering its tightest supply environment ever.
Exchange balances just fell to 8.84% of total supply, a level we’ve never seen before.
For context, $BTC is still sitting near 14.8%.
ETH keeps getting pulled into places that don’t sell, staking, restaking, L2… pic.twitter.com/T7MW3D2bG1— Milk Road (@MilkRoad) December 5, 2025
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The divergence, they noted, is a classic indicator of “hidden buying strength” that can sometimes precede upward movements.
“This is a sign of buying strength, and typically, the price will follow,” the analyst remarked, while cautioning that indicators are not guarantees.
They added that the overall price action “looks bullish,” implying that ETH may revisit higher levels before any significant retracement.
ETH Maintains $3,000 as Momentum Grows
Ether has remained above the $3,000 threshold for nearly a week but continues to encounter resistance near $3,200. Over the past 24 hours, ETH has consolidated around $3,050, reflecting the broader market’s uncertainty.
The ETH/BTC pair also attracted attention last week after breaking above a long-standing downtrend, a movement some traders interpret as an early indication of capital rotating back into Ethereum.
Meanwhile, BitMine Immersion Technologies, already the largest corporate holder of Ether, has continued to aggressively purchase the dip even as leading traders prepare for further declines.
The firm acquired an additional $199 million in ETH over the past two days, contributing to its rapidly growing reserves.
BitMine now possesses $11.3 billion worth of Ether, approximately 3.08% of the total supply, and is approaching its long-stated objective of reaching 5%.
Last month, Tom Lee suggested that Ether may be entering the initial phases of a growth cycle similar to the one that propelled Bitcoin to a 100x rally since 2017.
Lee indicated that the current Ether market resembles Bitcoin’s setup eight years ago, a time characterized by significant volatility that ultimately preceded one of the most robust bull cycles in crypto history.
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