Ethereum's On-Chain Activity, Institutional Flows, and Supply Squeeze May Spark 2025 Bull Run

Ethereum’s recent price stagnation may be deceiving. According to prominent Ethereum developer Eric Conner, the network is quietly aligning three powerful catalysts that could ignite a major bull run. As market attention drifts toward other narratives, Ethereum’s fundamentals are quietly tightening — suggesting the calm may precede a storm.

One of the strongest tailwinds for Ethereum is the explosive growth in stablecoin activity. On-chain stablecoin transfers have increased for 21 consecutive months, bringing transaction volumes to levels rivaling Visa. This flow represents real, dollar-denominated demand for Ethereum block space. Every transfer, every on-chain settlement — whether on centralized exchanges or DeFi — consumes gas paid in ETH. This makes stablecoins not just a DeFi utility, but an indirect engine for ETH demand. Conner refers to this phenomenon as the “on-chain cash engine,” emphasizing that as long as stablecoin traffic remains robust, Ethereum’s economic layer stays vibrant — regardless of price action.

The second catalyst stems from institutional capital. In June alone, U.S.-listed spot Ethereum ETFs attracted over $1.17 billion in net inflows. With regulatory clarity improving, many asset managers expect this demand to multiply in the second half of 2025. The significance is twofold. First, ETF flows typically represent long-term, custodial holdings — not speculative trading. Second, this institutional capital provides a direct fiat ramp into ETH without the complexities of crypto-native wallets. As traditional investors move in, Ethereum becomes a more investable asset class, bolstering both credibility and price resilience.

The third and perhaps most striking development is the drastic decline in ETH reserves on centralized exchanges. As of early July, total exchange balances have dropped to 9 million ETH — a level not seen since 2015. This retreat suggests that investors are either withdrawing to cold storage or locking tokens into staking contracts, further tightening liquid supply. When ETF-driven demand meets dwindling exchange supply, it creates a textbook scenario for a supply squeeze. Conner warns that this could trigger a sharp price response once Ethereum breaks past key technical resistance at $2,600.

On the chart, ETH has been consolidating within the $2,400–$2,600 range, forming a series of higher lows despite declining volume. Analysts often interpret this pattern — compressing volatility and rising bottoms — as a prelude to breakout behavior. If ETH can decisively close above $2,600, momentum algorithms and sidelined capital may drive a parabolic move. Conner concludes that the market’s current “quiet” phase may be a misreading. “When these three forces combine — institutional demand, supply constraints, and on-chain activity — Ethereum’s price doesn’t just rise. It re-rates.”