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.

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.