ETH Supply on Exchanges Declines: Is a Supply Shock on the Horizon?
Due to increasing institutional accumulation, Ether holdings on centralized exchanges have fallen to their lowest level since 2016. Since the middle of 2020, exchange balances have been gradually declining, and throughout the last two years, the amount of Ether available has decreased by about 50%. As digital asset treasuries ramped up their accumulation, the ETH exchange exodus increased in mid-July, and balances have since dropped by 20%. According to Glassnode, the exchange balance has dropped to 14.8 million ETH as of Thursday.
With its Ethereum exchange supply ratio, which calculates the exchange reserve split by the overall supply, at 0.14 — its lowest since July 2016 — CryptoQuant finds a similar pattern. In order to increase yields, the asset is typically put into cold storage, staking, or DeFi when the exchange supply declines. It is frequently an indication that investors are getting ready to sell when exchange balances rise.
Ethereum Exchange Outflows Surge to Highest Level Since 2022
Additionally, according to CryptoQuant statistics, the 30-day moving average of total Ethereum exchange net flows increased this week to its highest level since late 2022, suggesting that flows are accelerating.
Large-scale withdrawals often indicate a shift toward self-custody or DeFi deployments, reducing exchange liquidity and immediate selling pressure,
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In the meantime, on Wednesday, Glassnode’s exchange net position change indicated a negative 2.18 million ETH. In the last ten years, it has only risen over this five times.
Institutions Snap Up 10% of Ethereum Supply in Record Buying Spree
According to StrategicEthReserve, since April, about 68 firms have acquired 5.26 million ETH, valued at about $21.7 billion, or 4.3% of the total supply. Instead of holding the asset on exchanges, the great majority of them are staking it for higher yields. Increased inflows have also been observed into US spot Ether exchange-traded funds within the same time frame. These currently amount to 6.75 million ETH, or over $28 billion, or 5.6% of the entire supply. This indicates that institutional entities have acquired about 10% of all ETH in existence, with accumulation picking up speed in recent months.
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