Ethereum's exchange balances have reached negative levels for the first time, attributed to record withdrawals of the digital currency. Data indicates a change in ETH holder behavior towards asset accumulation.
Negative Exchange Balances
According to analyst Cas Abbé, Ethereum’s exchange balances have shown net outflows exceeding inflows, indicating a significant shift in ETH circulation. Abbé stated: > "This isn’t noise, it’s billions in ETH being pulled off exchanges." This data points to a shrinking liquid supply as tokens are transferred into self-custody or cold storage. Abbé added: > "ETH isn’t being positioned to sell, it’s being positioned to hold." Exchange balances have been declining since late 2020, falling from over 27 million ETH to below zero this month.
Ethereum Price Trends
At the time of writing, Ethereum is trading at $4,390 with a 24-hour volume of $24 billion. The asset has remained steady daily but has declined by 3% over the past week. However, exchange withdrawals indicate reduced selling pressure. Trader Merlijn described Ethereum's pattern as a repeating cycle, noting: > "First, the shakeout. Then, the disbelief rally. Finally, the vertical blow-off."
ETF Growth Increases Demand
Ethereum exchange-traded funds have also played a significant role in recent market activity. Milk Road highlighted strong inflows since July, stating: > "The $ETH ETFs took their time getting started... but once momentum hit, they never looked back." ETF participation, combined with shrinking exchange supply, has added to the demand side of the market, indicating conditions for tightening supply.
The situation with Ethereum's exchange balances and the active growth of ETFs create significant market trends. Changes in liquidity and asset accumulation may signal future market movements.
