Ethereum News Today: Ethereum Exchange Supply Hits 2016 Lows as Staking and Institutional Holding Curb Liquidity

Ethereum's exchange supply has fallen to levels not seen since 2016, signaling a significant tightening in the available ETH for trading. This drop is driven by institutional accumulation and growing staking activity, reducing liquidity and potentially increasing price volatility. With over 37 million ETH locked in staking and 5.96 million ETH held in corporate and institutional treasuries, the network is witnessing a structural shift in supply dynamics.

Exchange balances have dropped to a ratio of 0.137, as reported by CryptoQuant. This decline indicates that holders are moving assets off exchanges into long-term storage, reducing immediate sell-side pressure. Institutional investors are a major contributor, with 27 public entities collectively holding $17.7 billion in ETH.

The current exchange supply squeeze has historical precedents, often preceding major price rallies. In past cycles, similar supply reductions have led to strong upward volatility as less ETH is available for trading. This dynamic amplifies demand imbalances and signals growing conviction among long-term holders.

Why the Exchange Supply Drop Matters

Ethereum's tightening exchange supply is a result of multiple factors. Staking has removed a significant portion of circulating supply, with nearly 37 million ETH locked in validator rewards. Additionally, layer-2 ecosystems like Base and Arbitrum are absorbing liquidity, further reducing available ETH for trading.

Corporate and institutional adoption is also playing a pivotal role. Public companies and government-linked entities are increasingly viewing ETH as a strategic asset. BitMine Immersion, for instance, added 407,331 ETH in the last 30 days alone, one of the largest accumulations by a public entity in recent history.

This surge in institutional accumulation adds a new layer of structural demand not seen in earlier cycles. Unlike retail-driven buying, corporate treasuries are often long-term holdings, reducing the likelihood of immediate sell-offs and bolstering network stability.

Technical and Market Indicators

Ethereum is consolidating around $3,090 as of December 2025, with technical indicators like MACD and RSI suggesting a potential continuation of the bullish trend. Despite short-term volatility, the price remains within a higher-lows structure since the 2022 cycle low, preserving the broader bullish framework.

Trading volume has reached $11.5 billion, indicating strong liquidity even during the consolidation phase. Institutional staking and accumulation continue to reduce the liquid supply, making the market more sensitive to demand surges. Analysts like CW suggest that Ethereum's advance toward $6,200 remains structurally valid based on measured impulse waves.

Moreover, the former resistance zone between $3,800 and $4,000 now acts as support, containing recent pullbacks. Holding above this level would maintain the uptrend's integrity. On-chain analytics show over 30% of ETH staked, limiting available supply and amplifying price responsiveness to demand.

What This Means for Investors

Ethereum's supply squeeze could create a low-liquidity environment where even modest demand could lead to significant price appreciation. Historical data suggests that such squeezes often precede major price expansions. Investors should monitor key levels like the $3,800–$4,000 support zone and watch for signs of institutional inflows through ETH ETFs.

Despite the bullish structural indicators, caution remains necessary. Ethereum is trading below key EMAs on daily charts, and the MACD still shows bearish signals. A daily close above $3,000 would affirm the short-term bullish outlook, but investors should remain mindful of the broader bearish conditions.

For institutional investors, the current supply dynamics offer a compelling case for long-term holding. With over 4.94% of total ETH supply held in treasuries, the network is positioned to benefit from sustained demand. This structural shift could enhance Ethereum's role in decentralized finance and expand its appeal to traditional financial markets.