Ethereum supply crisis? Exchange reserves plummet to 9-year low

Ethereum’s supply on exchanges hit its lowest level since 2015 with only 8.97 million ETH left on exchanges. However, that hasn’t saved its price as ETH is down 47% from its highs. Ethereum is disappearing from exchanges but instead of pumping it turned out to be one of the worst performers.

Ether price is down by a heavy 27% in the last 30 days but it tried to reverse the downward trend recently. However, top altcoins like Ripple’s XRP and Cardano (ADA) have outperformed ETH in all time frames. The biggest altcoin’s unexpected downfall has already spread panic among the community and whales.

Ethereum’s exchange reserves plunge

As per the data posted by Santiment, Ethereum’s holders have now brought the available supply on exchanges down to 8.97 million. It suggests that DeFi and staking options have absorbed a huge amount of Ether. More ETH is getting locked up which might have reduced sell pressure.

It added that Exchange supply has fallen 16.4% in just 7 weeks signalling that whales might be accumulating. Ali posted that around 360K Ethereum were withdrawn from crypto exchanges in the last 48 hours.

👋 Thanks to the many DeFi and staking options, Ethereum's holders have now brought the available supply on exchanges down to 8.97M, the lowest amount in nearly 10 years (November, 2015). There is 16.4% less $ETH on exchanges compared to just 7 weeks ago. 😮 pic.twitter.com/r5957wPhLi

— Santiment (@santimentfeed) March 20, 2025

The price of ETH has dropped by 3% in the last 24 hours despite printing greens over the past 7 days. At press time, Ethereum is trading at an average price of $1,946. Its 24-hour trading volume is down by 33% to $11.57 billion.

Coinglass data shows that more than $31 million worth of long and short bets set on Ether price action got liquidated in the last 24 hours. $24.18 million worth of liquidated positions (76%) turned out to be long bets. This suggests that traders were expecting the ETH price to surge, but the selling pressure led it down.

ETH struggles as layer-2s dominate

ETH’s biggest problem is competition as Layer-2s are on the rise. Arbitrum and Base alone handled $5.67 billion in DEX volume last week. This amount is more than half of Ethereum’s total. Less mainnet activity results in fewer fees. Ethereum’s monthly revenue has collapsed from $218 million in December to just $46 million in February.

The Dencuna upgrade has slashed gas fees by 95% and the cheaper transaction also means less revenue for the network. As per the data provided by DefiLlama, Ethereum’s TVL has dropped by more than 20% in the past month. With TVL dropping from $76 billion to $46 billion, Ethereum is struggling to hold its DeFi dominance. Base’s TVL has managed to jump by 21% over the past 7 days.

Ethereum ETFs with staking look like one potential savior. The NYSE and CBOE want the SEC to approve it. Meanwhile, Ethereum Spot ETFs have bled $370 million in outflows

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now