Ethereum Exchange Supply Hits 2016 Lows, Sparking Market Stability Concerns

Ethereum's supply held on cryptocurrency exchanges has plummeted to levels not seen since mid-2016, a significant development given the network's massive growth since its inception. This drastic reduction in readily available ETH raises questions about potential market instability and amplified price volatility.

Key Takeaways

• Ethereum's exchange-held supply is at its lowest point since 2016, indicating a tighter liquid float.

• This contrasts with Bitcoin, whose exchange supply has risen to 2019 levels.

• Reduced liquidity could lead to more aggressive price movements in response to demand changes.

• Ethereum is currently trading under significant bearish pressure, testing critical support around $2,000.

Exchange Supply Tightening Signals Potential Liquidity Shift

Recent data from CryptoQuant reveals that the total ETH reserves across all exchanges have fallen to approximately 16 million ETH. This is a stark contrast to Bitcoin, which has seen its exchange balances increase to levels last observed around 2019. While some of the Bitcoin increase is attributed to investors simply using exchanges for custody, Ethereum's trend points in the opposite direction.

This significant decrease in exchange-available ETH suggests a potential shift towards long-term holding, increased staking participation, or greater deployment within decentralized finance (DeFi) protocols. While this can be positive for long-term value, it also means that the available supply to meet sudden demand or selling pressure is considerably lower.

Over-the-counter (OTC) balances for Ethereum have seen a modest increase, but this liquidity pool is not substantial enough to fully absorb significant market shocks. If exchange balances continue to tighten while OTC liquidity remains limited, the market could experience sharper and more volatile price reactions to even minor changes in demand or supply.

Ethereum Tests Critical Support Amidst Bearish Momentum

Ethereum is currently facing considerable selling pressure, trading below key moving averages (50-, 100-, and 200-period) and indicating a firmly bearish trend. The cryptocurrency has struggled to maintain its footing, recently testing the crucial psychological support level around $2,000. A decisive break below this range could potentially lead to further declines, with analysts eyeing levels around $1,700 or even $1,500.

The deterioration in market structure has been evident since late 2025, marked by consistent lower highs and a failure to reclaim significant moving averages. The recent price drop was accompanied by an expansion in trading volume, suggesting forced selling or defensive portfolio adjustments rather than orderly market repositioning. Momentum indicators also lean towards caution, with the daily Relative Strength Index (RSI) at 31.22 and the Average Directional Index (ADX) at 50.01, indicating strong bearish pressure.

Until Ethereum can reclaim key moving averages and establish higher lows, the market is likely to remain in a consolidation phase with persistent downside risk, exacerbated by the current low exchange liquidity.

Sources

• Ethereum Supply on Exchanges Mirrors 2016 Levels: What Happens Next? — TradingView News, TradingView.

• Ethereum supply falls to 2016 levels - Is ETH’s market unstable?, AMBCrypto.