The amount of Ether stored on centralized crypto exchanges has reached an unprecedented low, a development that analysts suggest could lead to a supply squeeze.
Ether (ETH) exchange balances fell to 8.7% on Thursday of the previous week, marking the lowest point since the network's launch in mid-2015. According to Glassnode data, the proportion of the asset held on exchanges remained low at 8.8% as of Sunday.
The total amount of ETH held on exchanges has decreased by 43% since the beginning of July. This period coincided with an increase in purchasing activity by digital asset treasuries (DATs).
"ETH is quietly entering its tightest supply environment ever," commented the macro investment research feed "Milk Road." The feed further noted that this level "is a level we’ve never seen before."
In comparison, Glassnode data indicates that the amount of Bitcoin held on exchanges was higher, standing at 14.7%.
Milk Road elaborated that ETH is continuously being moved into non-exchangeable locations, including staking, restaking, layer-2 activity, DATs, collateral loops, and long-term custody. This trend suggests that a supply squeeze could potentially drive price momentum.
Sentiment feels heavy right now, but sentiment doesn’t dictate supply. ETH supply is tightening in the background while the market decides its next move. When that gap closes, price follows.
Volume Momentum Indicator Signals Buying Strength
Analyst "Sykodelic" reported on Friday that the On-Balance Volume (OBV) indicator, which is based on trading volume, had broken above a resistance level. Despite this technical signal, the price was subsequently rejected. This scenario represents a classic divergence, often indicating hidden buying strength that can precede upward price movements.
This is a sign of buying strength, and typically, the price will follow. Nothing is guaranteed with indicators, but I have found that OBV tends to be one of the most reliable leading indicators.
"Mix that with the fact that the PA [price action] just looks bullish, I think we’re going to see high before any meaningful pullback," the analyst added.
ETH Holds Above $3,000
Ether prices have largely remained above the $3,000 mark for the past five days, although the asset has been unable to break through resistance at $3,200.
Over the last 24 hours, ETH has consolidated around the $3,050 area, where it is currently trading.
Ether's price performance relative to Bitcoin garnered significant attention last week, as the ETH/BTC trading pair broke above its established downtrend line.