The amount of Ether (ETH) held on centralized exchanges has reached a record low, stirring concerns of a potential supply squeeze in the market. According to data from Glassnode, the percentage of ETH on exchanges dropped to 8.7% last Thursday, marking its lowest level since the network’s inception in 2015. By Sunday, this figure remained barely higher at 8.8%, continuing the downward trend. Since the beginning of July, ETH reserves on exchanges have plummeted by 43%, coinciding with the surge in digital asset treasury (DAT) purchases.
Tightening Supply Environment
As fewer Ether coins remain on exchanges, market analysts warn of a tightening supply environment. Macro investment research feed, Milk Road, noted that ETH is entering its “tightest supply environment ever.” They emphasized that a growing portion of the cryptocurrency is being moved to platforms where it is not likely to be sold. These include staking, restaking, Layer-2 activity, DATs, collateral loops, and long-term custody, all of which further reduce the available supply.
$ETH is quietly entering its tightest supply environment ever.
Exchange balances just fell to 8.84% of total supply, a level we’ve never seen before.
For context, $BTC is still sitting near 14.8%.
ETH keeps getting pulled into places that don’t sell, staking, restaking, L2… pic.twitter.com/T7MW3D2bG1
— Milk Road (@MilkRoad) December 5, 2025
Interestingly, Bitcoin (BTC) has not seen the same level of depletion on exchanges. According to Glassnode, Bitcoin’s exchange balances stand at 14.7%, significantly higher than Ether’s. The decreasing supply of ETH on exchanges could create upward price pressure, particularly as the market waits for the next major move.
Supply Crunch May Impact ETH’s Price Action
While Ether’s price action has been consolidating around $3,050 in recent days, technical indicators suggest that the market could soon see higher prices. Analyst Sykodelic pointed out that the On-Balance Volume (OBV) indicator had broken above resistance, signaling a potential for price gains despite recent rejections. This indicator, which tracks buying and selling pressure, is often seen as a leading signal for upcoming price movements. The analyst further suggested that the overall price action appeared bullish, hinting that Ether may break through resistance levels soon.
$ETH is also looking on the LTF here.
We have an OBV break above resistance before the price.
You can see very clearly, on this chart, that the price rejected from the resistance level…
But OBV broke straight through.
This is a sign of buying strength and typically, the… pic.twitter.com/cMUszoYL1X
— Sykodelic 🔪 (@Sykodelic_) December 5, 2025
Even as ETH struggles to break the $3,200 resistance, its persistent holding above $3,000 indicates market strength. This level of resilience, combined with tightening supply, could potentially fuel future price rallies. As ETH continues to be absorbed by various long-term mechanisms like staking and institutional purchases, its limited availability may have a significant impact on price dynamics.
Despite a heavier sentiment in the market, it is clear that the supply side is quietly tightening, potentially setting the stage for a price surge once the market adjusts. The next few weeks could be crucial in determining the direction for ETH, with many eyes watching for signs of further supply constriction or demand expansion.