TLDR
- Ethereum's exchange reserves have dwindled to figures unseen since November 2015, standing now at a mere 8.97 million ETH.
- Over the past month, the value of ETH has plummeted by as much as 47%, currently bouncing between $1,970 and $1,990.
- A reduced exchange inventory often hints at growing long-term investor interest, suggesting potential 'supply shock' scenarios.
- Ethereum grapples with hurdles such as falling mainnet operations, diminishing fee income, and Layer-2 network rivalry.
- For 12 consecutive days, there have been outflows in Ethereum spot ETFs, culminating in withdrawals amounting to $370.6 million.
In a dramatic turn, Ethereum's stash on cryptocurrency exchanges has shriveled to its lowest since November 2015, leaving only 8.97 million ETH in circulation. This marks a 16.4% drop within a mere seven weeks.
This rapid reduction implies that ETH holders are transferring their assets into more secure, long-term storage, a move seen by many crypto experts as a bullish outlook on Ethereum's future value.
As indicated by crypto analytics firm Santiment on March 20, ETH has steadily vacated exchanges since late January.
Thanks to various DeFi and staking avenues, Ethereum holders have slashed the exchange supply to 8.97M, marking a near decade low since November 2015, with a 16.4% contraction in merely seven weeks. $ETH This scenario is a classic precursor to what's often described as a 'supply shock.' When the liquidity for swift market trading dwindles, even slight upticks in demand can propel prices upward. pic.twitter.com/r5957wPhLi
— Santiment (@santimentfeed) March 20, 2025
We've witnessed this trend with Bitcoin before. In January, its exchange holdings dipped to a seven-year low before it catapulted to unprecedented heights.
Despite favorable supply metrics, Ethereum's market performance has lagged behind. Its valuation hovers around $1,990, showing a steep decline from recent peaks by 26-47%.
Back in the dynamic bull phase of late 2024 into 2025, ETH flirted with the $4,000 level multiple times. However, unlike Bitcoin and its contemporaries, Ethereum didn't break its previous all-time high of $4,878 from November 2021.
The token experienced a sharp decline, hitting a trough of $1,750 last week, marking a 55% dip from its recent high.
Despite the setbacks, numerous crypto traders are still hopeful. Crypto General informed his 230,800 social media followers that a major 'supply shock' is merely a matter of time.
ETH’s Conflicting Signals
Another voice in the community, Ted, remarked on the dwindling exchange supply, predicting heated buyer activity that will lead to 'bidding wars.'
As the available supply tightens, we may soon witness intense competition among buyers, leading to higher bids.
Exchange reserve $ETH is decreasing with the day.
Crypto analyst Naber has even ventured to forecast a significant accumulation phase for ETH, foreseeing price levels between $8,000 and $10,000 in the times ahead.
It\"s only a matter of time. pic.twitter.com/uKVkknAAOC
— Ted (@TedPillows) March 19, 2025
However, not all signs are encouraging. Ethereum's performance against Bitcoin is at a five-year low, according to analysis by Daan Crypto Trades.
Ethereum spot ETFs have seen an exodus for 12 days straight, with outflows totaling $370.6 million as per Farside data.
Another red flag is the waning activity on Ethereum's mainnet. The monthly trading volume on decentralized exchanges (DEX) declined from $92 billion in December to $82 billion by February.
Layer-2 solutions like Arbitrum and Base are gaining ground thanks to their cost-effectiveness. These platforms handled $5.67 billion of last week's $9.8 billion in Ethereum-backed DEX trades.
This shift has negatively impacted Ethereum's fee revenue, which plummeted from $218 million in December to a modest $46 million by February. The recent Dencun update made transactions cheaper, slicing gas fees by 95%, but it also dampened earnings.
Ethereum faces a hurdle at the $2,042 mark, with its 50-day moving average presenting a challenge. A breakthrough here could lead to targets of $2,163 and $2,370.
From a technical perspective, Ethereum Conversely, failure to maintain the $1,986 support level could spell trouble, pushing valuations toward $1,714, where buying interest was previously observed. The RSI is at 41.22, indicating ETH is emerging from oversold territory but without robust momentum.
Analysts at Standard Chartered recently cut their end-of-year target price for ETH from $10,000 to $4,000, citing enhanced competition from Layer-2 networks as a key factor. ETH A potential boon for Ethereum could arise from staking ETFs. Both the NYSE and CBOE have lodged applications with the SEC seeking approval to introduce staking in Ethereum ETFs.
Maisie is a seasoned journalist in the Crypto & Financial news sector, having contributed to publications like Moneycheck.com, level-up-casino-app.com, Computernet, and currently serving as Editor in Chief at Blockfresh.com.
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