Ether Exchange Balances Hit All-Time Lows, Fueling Supply-Squeeze Narratives

• ETH held on exchanges fell to 8.7% of the total supply on Thursday, marking the lowest level since Ethereum’s launch in 2015, and is still only 8.8%.
• The drop, a 43% decline since July, is fueling talk of a supply squeeze as ETH moves into non-selling areas like staking, restaking, Layer-2 networks, and long-term custody.
• An analyst pointed to a bullish breakout in On-Balance Volume (OBV), indicating “hidden” buying momentum that often precedes upward price movements.

Ether (ETH) exchange balances fell to 8.7% of total ETH supply on Thursday, the lowest level since Ethereum launched in mid-2015, and were still only 8.8% on Sunday, according to Glassnode data.

This has intensified talk of a possible supply squeeze in the market. 

More specifically, since the start of July, the share of ETH on exchanges has fallen by 43%, a slide that coincides with a pickup in buying from digital asset treasury (DAT) firms. By comparison, about 14.7% of Bitcoin is currently held on exchanges, Glassnode data shows.

Read more: SEC Slams the Brakes on Supercharged ETFs Amid Risk Concerns

A Tight Supply Environment

Crypto and research outlet Milk Road said ETH is entering its “tightest supply environment ever,” noting that coins are being moved into areas that rarely sell, including staking and restaking, activity on layer-2 networks, DAT balance sheets, collateral loops in DeFi, and long-term self-custody. 

ETH keeps getting pulled into places that don’t sell, staking, restaking, L2 activity, DA layers, collateral loops, long term custody. And yes, sentiment feels heavy right now, but sentiment doesn’t dictate supply.

Milk Road.

On the technical side, analyst Sykodelic pointed to a recent breakout in On-Balance Volume (OBV), a momentum indicator that tracks whether trading volume is flowing into or out of an asset. OBV broke above resistance even as ETH’s price was rejected, a divergence the analyst described as a sign of “hidden” buying that often precedes upward moves.

Sykodelic said OBV is one of the more reliable leading indicators and, combined with what they see as bullish price action, expects ETH to make new highs before any meaningful pullback.

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ETH’s price has seen little traction in the past couple of days, currently trading at US$3.05K (AU$4.59K), which is a 2% increase on the weekly chart. The recent Fusaka upgrade on the Ethereum network wasn’t enough to boost momentum for ETH, it seems, even though this upgrade will bring a myriad of new features and improvements to the blockchain.

Most valuation models have pointed out that ETH remains heavily undervalued, with 10 out of 12 pointing to an ideal average value of over US$9,000 (AU$13.5K).

Talking about staking, a recent whale woke up after 10 years and, instead of selling like most of them do, it moved its 40,000 ETH stash into staking, as Crypto News Australia reported.

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