Ether at lowest exchange levels since 2015 raising fears of supply strain

Ether exchange balances fall to 8.7 percent, the lowest since 2015, as more ETH moves into staking and long-term custody.

Ether has reached its lowest exchange balance since 2015, and analysts are watching the rapid drop as more tokens move into staking and long-term storage. The shift has created concern about a possible supply strain if demand rises while exchange reserves stay tight.

Exchange Balances Fall to Historic Lows

Glassnode data shows that Ether balances on centralized exchanges fell to 8.7 percent last week. This is the lowest level since the network launched in 2015. The level remained near this low through the weekend as the balance stayed at 8.8 percent on Sunday.

The drop marks a 43 percent fall since early July. That period also saw growing digital asset treasury activity, which added more long-term demand for Ether. Analysts said that large transfers moved ETH into areas that tend to hold the asset for long periods.

The macro research feed Milk Road said the asset is now in “its tightest supply environment ever.” The group added that this level has never been recorded before. It compared the trend with Bitcoin, which still has 14.7 percent of its supply on exchanges.

Stake and Custody Demand Pull Ether Off Exchanges

More Ether is moving into staking, restaking, layer-2 platforms, long-term custody, and collateral systems. These uses reduce circulating supply on exchanges because the tokens often stay locked for longer periods.

Milk Road said that “sentiment feels heavy right now, but sentiment does not dictate supply.” The group added that the supply continues to tighten while the market waits for its next move. Analysts said that price often reacts when tight supply meets new demand.

Glassnode data also showed a widening gap between Bitcoin and Ether exchange balances. This gap has grown during the past year, and it may guide traders as they look at relative supply conditions.

Related Reading: Ether Dips Below $3,400 as Whales Snatch $1.37B in Accumulation

Analysts Watch Momentum Indicators and Key Price Levels

Analyst Sykodelic said that Ether’s On-Balance Volume indicator broke above resistance late last week. The price did not follow the move and was rejected soon after. The analyst said that this can be a “classic divergence” that signals hidden buying strength.

Sykodelic added that OBV is one of the most trusted volume indicators and said, “This is a sign of buying strength.” The analyst also said that price often moves up when OBV breaks out while price lags.

Ether has held above $3,000 for five days even though it has not pushed past $3,200 resistance. The asset traded near $3,050 during the past day. Traders also watched the ETH/BTC pair, which moved above a downtrend line last week and drew new attention from analysts.

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