Ether held on centralized exchanges has fallen to its lowest level in history, fueling speculation that a supply squeeze may be forming beneath the surface of the market.
Key Takeaways:
- ETH exchange balances have dropped to a record low of 8.7%, a 43% decline since July.
- Staking, L2 activity, DATs, and long-term custody are tightening liquid supply.
- Analysts see hidden buying strength, hinting at potential upward momentum.
According to Glassnode, exchange balances dropped to 8.7% of total ETH supply last Thursday, the smallest share recorded since Ethereum’s launch in 2015. Levels remained near that low at 8.8% on Sunday.
ETH Exchange Balances Plunge 43% as Supply Tightens to Record Levels
The sharp decline represents a 43% drop in ETH exchange balances since early July, coinciding with the acceleration of digital asset treasury (DAT) purchases and growing activity across the broader Ethereum ecosystem.
Macro research outlet Milk Road said ETH is “quietly entering its tightest supply environment ever,” noting that Bitcoin’s exchange balance remains significantly higher at 14.7%.
Analysts attributed the shift to structural changes in how ETH is being used. More tokens are flowing into staking, restaking protocols, layer-2 networks, DAT balance sheets, collateralized DeFi positions, and long-term self-custody, destinations that historically do not circulate supply back onto exchanges.
“Sentiment feels heavy right now, but sentiment doesn’t dictate supply,” Milk Road wrote. “When that gap closes, price follows.”
Beyond supply metrics, market technicians are spotting signals that buyers may be gaining control. Analyst Sykodelic highlighted an On-Balance Volume (OBV) breakout above resistance late last week, even as price failed to follow.
$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
The divergence, they said, is a classic sign of “hidden buying strength” that sometimes precedes upward moves.
“This is a sign of buying strength, and typically, the price will follow,” the analyst noted, while cautioning that indicators aren’t guarantees.
They added that overall price action “looks bullish,” suggesting ETH may revisit higher levels before any meaningful retracement.
ETH Holds $3,000 as Momentum Builds
Ether has held above the $3,000 mark for nearly a week but continues to face resistance near $3,200. Over the past 24 hours, ETH has consolidated around $3,050, mirroring the broader market’s indecision.
The ETH/BTC pair also drew attention last week after breaking above a long-standing downtrend, a move some traders see as an early sign of capital rotating back into Ethereum.
Meanwhile, BitMine Immersion Technologies, already the largest corporate holder of Ether, has continued aggressively buying the dip even as top traders position for further declines.
The firm purchased another $199 million in ETH over the past two days, adding to its rapidly expanding reserves.
BitMine now controls $11.3 billion worth of Ether, roughly 3.08% of the total supply, and is closing in on its long-stated goal of reaching 5%.
Last month, Tom Lee said Ether may be entering the early stages of the type of explosive growth cycle that propelled Bitcoin to a 100x rally since 2017.
Lee said the current Ether market resembles Bitcoin’s setup eight years ago, a period marked by deep volatility that ultimately preceded one of the strongest bull cycles in crypto history.
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