Ethereum held on centralized exchanges has fallen to all-time lows, fueling speculation that a supply squeeze may be developing beneath the market’s surface.
Key points:
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ETH trading balances have dropped to an all-time low of 8.7%, down 43% since July.
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Staking, L2 activity, DAT, and long-term escrow are tightening liquidity supply.
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Analysts believe hidden buying power hints at underlying upside momentum.
Last Thursday, exchange balances fell to 8.7% of ETH supply, the smallest share recorded since Ethereum was launched in 2015, according to data from Glassnode. On Sunday, the level remained near a low of 8.8%.
The sharp drop, which means ETH trading balances are down 43% since early July, coincides with an acceleration in Digital Asset Treasury (DAT) purchases and growing activity across the Ethereum ecosystem.
Macro research firm Milk Road said that ETH is “quietly entering the tightest supply environment ever,” noting that Bitcoin’s transaction balance remains significantly higher at 14.7%.
Analysts attribute this shift to structural changes in how ETH is used. More tokens are flowing into staking, re-staking protocols, layer 2 networks, DAT balance sheets, collateralized DeFi positions, and long-term self-custody, destinations that historically have not funneled supply back to exchanges.
“Market sentiment is heavy right now, but sentiment does not determine supply,” Milk Road wrote. “When the gap closes, prices will follow.”
In addition to supply indicators, market technicians are also spotting signals that buyers may be gaining control. Analyst Sykodelic highlighted that on-balance volume (OBV) broke through resistance late last week, although price failed to follow.
Such divergence is a classic sign of “hidden buying power” that sometimes precedes a move higher, they said.
“This is a sign of strong buying and typically, prices follow,” the analyst noted, while cautioning that the indicator was no guarantee.
They added that the overall price action “looks bullish,” suggesting that ETH may revisit higher levels before any meaningful pullback.
Ethereum has been holding above the $3,000 mark for nearly a week but still faces resistance near $3,200. ETH has been consolidating near $3,050 over the past 24 hours, reflecting broader market indecision.
The ETH/BTC pair also attracted attention last week after it broke out of a long-term downtrend, with some traders viewing the move as an early sign of capital returning to Ethereum.
Meanwhile, BitMine Immersion Technologies, already the largest corporate holder of Ethereum, continues to buy on dips even as top traders anticipate further price declines.
