Ethereum exchange reserves have dropped to a fresh 9-year low, coinciding with increasing Treasury holdings.
In the world of cryptocurrency, Ethereum (ETH) is making significant strides towards new all-time highs. The conditions for a rally seem to be falling into place as more capital is committed to ETH, and exchange reserves approach historic lows.
The decline in Ethereum's exchange reserves indicates a reduction in sell-side pressure. On-chain data shows that these reserves have dropped to around 18.7 million ETH, roughly 15.5% of the circulating ETH supply, the lowest since 2016—a nine-year low for this metric. This suggests substantial accumulation by whale wallets and institutional investors, effectively tightening available supply on exchanges and supporting price stability or upward momentum amidst demand.
Three notable wallets have scooped up an additional 73,821 ETH, worth roughly $283 million. One of these wallets received over 138,000 ETH, worth more than $531 million, between July 18 and July 23. The Ether Reserve LLC, a treasury management arm of The Ether Machine, also recently acquired nearly 15,000 ETH, valued at around $56 million. These acquisitions represent approximately 15.5% of the total ETH circulating supply.
Another whale address, "0xF436," withdrew 14,520 ETH worth about $53 million from exchanges in the past 9 hours. Eleven newly activated wallets have collectively accumulated 722,152 ETH, valued at $2.77 billion, since July 9. Major investors have been actively buying Ethereum in recent weeks, draining exchange reserves. FalconX accounted for the three largest single-wallet purchases of Ethereum in the past week.
The Ethereum validator exit queue has reached an all-time high of 521,000 ETH. This high exit queue could indicate a potential decrease in the number of active validators on the Ethereum network. Lower exchange reserves mean fewer ETH tokens are immediately accessible for liquidation, which can amplify price rallies when buying interest arises.
At the time of writing, Ethereum is trading at $3,485, down by 5.5% in the past 24 hours. However, the price recently climbed back above $3,800, with ongoing optimism for a push toward the $4,000 psychological level and possibly higher toward its previous highs above $4,400. Ethereum is currently outperforming other cryptocurrencies.
In summary, the key significance of the decline to 2016-level reserves is indicative of strong accumulation and reduced willingness to sell, shrinks sell-side liquidity on exchanges, supports price appreciation potential through supply scarcity, and aligns with whale buying behavior and long-term holding trends that commonly precede rallies to new highs. Thus, this exchange reserve metric is an important fundamental indicator supporting the narrative of a potential ETH rally to fresh all-time highs.
[1] Data from Coin Metrics and Glassnode. [2] Data from Messari. [3] Data from Santiment.
Institutional investors and whales are significantly accumulating Ethereum, reducing exchange reserves to levels not seen since 2016, which could increase price stability or upward momentum. This decline in reserves also indicates a decreased willingness to sell, further supporting the potential for an Ethereum rally to reach new all-time highs.
