FameEX Hot Topics | Ethereum Supply on Exchanges Falls to 9-Year Low During Wall Street Boom

Ethereum’s exchange balances have plunged to a nine-year low of 14.8 million ETH, marking a significant shift in the digital asset market. This decline is largely driven by the increased buying activity from digital asset treasury firms and exchange-traded funds (ETFs). Since mid-2020, the amount of Ethereum on exchanges has been steadily decreasing, with the supply on exchanges halved over the past two years. The pace of this exodus picked up significantly in mid-July, with Ethereum balances falling by 20% since then, as institutional investors and corporate treasuries have aggressively accumulated the cryptocurrency.

As of Thursday, the total supply of Ethereum on exchanges stands at just 14.8 million ETH, according to Glassnode. CryptoQuant’s Ethereum exchange supply ratio, which measures the exchange reserves relative to the total supply, has also dropped to its lowest level since July 2016, reaching a ratio of 0.14. Typically, a decline in exchange reserves signals that the cryptocurrency is being moved off exchanges for cold storage, staking, or being deployed in decentralized finance (DeFi) platforms, where it can earn higher yields. Conversely, an increase in exchange balances often suggests that investors are preparing to sell their holdings, which increases market liquidity.

The trend of large-scale withdrawals from exchanges has been accelerating, as revealed by CryptoQuant’s data. The 30-day moving average of Ethereum exchange net flows reached its highest level since late 2022, signaling an increase in outflows. Large withdrawals often indicate that investors are shifting toward self-custody or DeFi platforms, reducing exchange liquidity and dampening immediate selling pressure. In line with this, Glassnode reported a negative 2.18 million ETH on Wednesday in its exchange net position change, a figure that has only been exceeded five times in the past decade. This further confirms the trend of large outflows, which began in June when corporate Ethereum treasuries like BitMine started aggressively accumulating the asset.

Since April, around 68 institutional entities have acquired a total of 5.26 million ETH, valued at approximately $21.7 billion, representing 4.3% of the total supply. The majority of these entities are staking their ETH for additional yields, rather than keeping it on exchanges. In addition, U.S. spot Ethereum ETFs have seen significant inflows, totaling 6.75 million ETH, worth almost $28 billion, or 5.6% of the total supply. This means that approximately 10% of all Ethereum in existence has been absorbed by institutional entities, a trend that has gained momentum over the past few months.

Despite the continued institutional interest, Ethereum prices have recently faced downward pressure. Over the past week, the price of Ethereum has fallen by more than 11%, dipping below $4,100 on Thursday morning. While the accumulation trend among institutional investors remains strong, the price fluctuations highlight the volatility of the market. Analysts, such as Rachael Lucas from BTC Markets, have suggested that Ethereum is undergoing its “Wall Street glow-up,” with corporate treasuries steadily accumulating ETH. However, the recent price drop demonstrates that, despite increasing institutional adoption, market volatility remains a significant factor for Ethereum’s price trajectory.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.