Why Ethereum’s (ETH) 2016-Level Supply Could Spark a Rally

Key Insights:

• Ethereum exchange balances have dropped to 2016 levels despite a much larger network today.
• Whales are increasing holdings while retail sells, reducing available ETH for future market demand.
• OTC supply remains limited, raising concerns about liquidity if real buyer demand returns quickly.

Ethereum held on centralized exchanges has dropped to levels last seen in mid-2016. This reduction stands out, especially when considering the scale of the network today compared to a decade ago. Back then, Ethereum had far fewer users and applications than it does now.

Current low balances suggest that most ETH is not readily available for trading. Instead, it is being stored by holders who are not moving their assets to exchanges. The decrease in exchange-held ETH reduces the liquid supply that can respond to short-term market activity.

Meanwhile, off-exchange trading activity has grown slightly in recent months, but the total amount of ETH held in OTC wallets remains limited. CryptoQuant data shows that this supply is still small when compared to exchange volumes.

CoinNiel pointed out, 

If OTC liquidity also declines, it may become harder for buyers to find available ETH without affecting the price.

Large Holders Increase Exposure During Price Drop

Ethereum’s recent price drop was followed by a rise in inflows to accumulation wallets, addresses that receive ETH but do not send it out. These wallets now hold more than 24 million ETH, the highest level on record. Most of this growth has taken place since late 2023.

CW commented, 

While smaller investors appear to have sold during the downturn, larger entities continued to build their positions. This trend may reduce sell-side pressure in the near term.

Market Levels and Trading Views

Ethereum is priced at $2,060 at press time. Over the past 24 hours, the price is down by almost 2%, and over the past seven days, it has fallen by more than 7% (per CoinGecko data). Short-term price moves are closely tracking broader crypto sentiment, especially Bitcoin.

Technical analysts are focused on near-term levels. CryptoWZRD noted that ETH is testing $2,120 resistance, with attention on short-term setups. Crypto Tony stated, “We do have liquidation levels stacking up at the $2200 range,” but expects a move to the $2000–$2050 zone before a potential shift in direction.

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