Decoding Ethereum’s $4,400 test – Are THESE divergences a rally signal or a sell trap?
- Bitcoin and Ethereum balances on exchanges are at multi-year lows, hinting at a supply squeeze.
- Growing adoption and self-custody suggest crypto is shifting from speculation to long-term value storage.
Bitcoin [BTC] and Ethereum [ETH] are quietly vanishing from CEXes, fueling speculation about a looming supply crunch.
As the available float continues to shrink, long-term holders appear to be tightening their grip — leaving the community questioning what this means for the next phase of the market cycle.
By the numbers
Bitcoin’s supply on exchanges has fallen to just 7.1% — its lowest level since November 2018 — while Ethereum has dropped below 4.9% for the first time in its 10+ year history.
The pace of outflows over the past five years is striking: more than 1.7 million BTC and 15.3 million ETH have been withdrawn from CEXes.
These figures indicate a growing trend toward self-custody and long-term holding, potentially setting the stage for a supply squeeze if demand begins to accelerate.
Source: Santiment
The supply shock debate
A supply shock typically occurs when available tokens on exchanges dwindle just as demand surges, creating upward pressure on prices. With BTC and ETH balances at multi-year lows, the stage seems set.
Historically, similar trends have preceded major rallies, as shrinking float limits sell-side liquidity. But not everyone’s convinced.
Some argue whales may simply be moving funds to cold storage for security, not accumulation. Others point to a still-cautious retail crowd and a possible cooling buzz post-ETFs.
If sentiment shifts, sidelined capital could re-enter exchanges, quickly reversing the trend.
Bitcoin: From fringe to mainstream
Roughly 50 million Americans now own Bitcoin — surpassing gold ownership by a wide margin, per River and The Nakamoto Project. As BTC vanishes from exchanges, this shift is huge as far as priorities go.
Source: X
Bitcoin is no longer a fringe asset but a growing reserve alternative. The sharp drop in exchange supply may be tied less to speculation and more to a long-term redefinition of value in the digital age.
