Ethereum Sharp Exchange Outflows Sparks A Historic Supply Squeeze, Here’s What It Means

In a sudden upside move, Ethereum has strongly reclaimed above the $4,300 price mark as bullish sentiment gradually returns to the crypto market. At the same time, a massive amount of ETH has been observed leaving centralized crypto exchanges, which has led to one of the most crucial moments for the leading altcoin in the ongoing bull market cycle.

Unprecedented Supply Shock For Ethereum Looms

With the price of Ethereum recovering sharply once again, the bullish sentiment and action of investors on crypto exchanges have intensified. Alphractal, an advanced investment and on-chain data analytics platform, revealed that Ethereum is undergoing one of its most dramatic supply movements to date, as large quantities of ETH continue to flee centralized exchanges at an accelerating pace.

According to the on-chain platform, the persistent withdrawal of ETH has created a historic supply squeeze. This is due to the fact that the quantity of ETH leaving crypto exchanges is now above the ability to accumulate more for the first time in history.

The record-breaking supply squeeze demonstrates an increasing tendency among investors to prioritize long-term holding and staking over active trading. As a result, there is a decrease in the available liquidity in the market.

In recent months, the data shows that billions of dollars worth of ETH have been withdrawn from crypto exchanges, regardless of whether you look at Netflow in ETH or USD value. 

Despite the massive withdrawal, Alphractal highlighted that the Exchange Flux Balance is what truly sticks out. The Exchange Flux Balance is a crucial metric that gauges the cumulative net flow of exchanges.

It is worth noting that high values on this metric suggest that inflows are outperforming outflows and that exchanges are increasing their reserves. Meanwhile, low or negative values indicate that exchanges do not have the capacity to accumulate enough, hence creating a supply squeeze.

Currently, this metric has gone negative for the first time ever, indicating strong institutional and public demand for ETH. Simply put, Ethereum is experiencing the strongest market maker interest since its launch, a structure that might flare up the market soon.

ETH Closed Q3 On A Very Bullish Note

As Q4 of 2025 kicks off, speculations are whether this quarter will be just as bullish as the recently finished Q3. Data from leading crypto researcher and analytics platform CryptoRank reveals that ETH experienced a very positive Q3, recording about 66.7% price gain.

According to the platform, Q3 of 2025 was a breakout quarter for the altcoin, as it finally broke past its previous all-time high and exhibited strong upside action. One of the major factors that fueled this surge is the US legislative moves, which consistently pushed stablecoins and DeFi into the mainstream.

Naturally, Ethereum became one of the major beneficiaries of this regulation change because the leading blockchain continues to be the foundation layer for both stablecoins and DeFi activity. With ETH witnessing a more bullish Q4 in the last 10 years, it is possible that this quarter could end on a positive note.