The amount of Ether held on centralized crypto exchanges has reached an all-time low, which analysts warn could lead to a supply crunch.
As of last Thursday, Ether (ETH) exchange balances fell to 8.7%, marking the lowest point since the network’s inception in mid-2015. The level remained low at 8.8% on Sunday, according to data from Glassnode.
The volume of ETH on exchanges has decreased by 43% since early July, coinciding with a rise in digital asset treasury (DAT) purchases.
“ETH is subtly entering its tightest supply environment ever,” remarked the macro investment research source “Milk Road,” which noted that it is “a level we’ve never witnessed before.”
In comparison, the volume of Bitcoin on exchanges was significantly higher, sitting at 14.7%, as per Glassnode.
ETH continues to flow into non-sell venues, including staking, restaking, layer-2 activities, DATs, collateral loops, and long-term custody, Milk Road added, implying that a supply squeeze could enhance price momentum.
“Sentiment feels heavy at the moment, but sentiment does not determine supply. The ETH supply is tightening as the market contemplates its next move. When that gap closes, the price adjusts accordingly.”
Volume momentum indicator shows buying strength
Analyst “Sykodelic” noted on Friday that there has been an On-Balance Volume (OBV) breakout above resistance.
However, the price faced rejection, indicative of a classic divergence suggesting hidden buying strength that often precedes upward movements.
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“This indicates buying strength, and typically, the price will follow. While indicators aren’t foolproof, I have found that OBV tends to be one of the most reliable leading indicators.”
“Pair that with the fact that the PA [price action] appears bullish, and I believe we’ll see highs before any significant pullbacks,” they added.
ETH maintains $3,000 level
Ether prices have generally remained above $3,000 over the last five days but failed to surpass resistance at $3,200.
In the past 24 hours, the asset has consolidated around the $3,050 mark, where it currently resides.
Ether’s performance against Bitcoin also attracted interest last week, with the ETH/BTC pair breaking through the downtrend line.
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