The amount of ETH held on exchanges has dropped to a historic low of 8.8%. What will the tightening supply bring?

[Bitpush] I recently went through Glassnode’s data and found something pretty interesting—the ETH reserves on centralized exchanges have dropped to 8.8%, basically the lowest since 2015.

What’s even crazier is that from early July until now, ETH on exchanges has evaporated by 43%. This timing lines up exactly with the frenzy of buying from Digital Asset Treasuries (DAT). For comparison, BTC still makes up 14.7% of exchange reserves, which is clearly much more “abundant” than ETH.

So where has all this ETH gone? The answer is actually pretty obvious: staking, restaking, Layer2 activities, DAT purchases, collateral loops, long-term custody… all scenarios where it’s not easy to sell. In other words, freely circulating ETH on the market is quietly shrinking.

Market sentiment is indeed pretty bad right now, but emotions are just emotions—supply is what really matters. ETH supply is tightening behind the scenes, and the market is winding up for something big. When this supply-demand gap really can’t hold anymore, I’d expect the price to react in a big way.