Analysts say that the amount of Ethereum stored in centralized cryptocurrency exchanges is at an unprecedented low, which may lead to a supply contraction.
Last Thursday, the balance of Ethereum held by exchanges dropped to 8.7%, the lowest level since the network launched in mid-2015. According to Glassnode data, the proportion of this asset held by exchanges remained low at 8.8% on Sunday.
Since early July, the amount of Ethereum on exchanges has decreased by 43%, which coincides with the time when purchases by the Digital Asset Treasury (DAT) began to accelerate.
The macro investment research information stream "Milk Road" commented, "Ethereum is quietly entering the tightest supply environment in history," adding, "This is an unprecedented level."
In contrast, according to Glassnode, the amount of Bitcoin on exchanges is higher, at 14.7%.
Milk Road further noted that Ethereum continues to be absorbed into non-selling venues, such as staking, re-staking, layer two activities, DAT, collateral loops, and long-term custody, suggesting that the supply contraction may drive price momentum.
Analyst "Sykodelic" stated on Friday that the On-Balance Volume (OBV)—a volume-based momentum indicator—has broken through resistance.
However, the price faced rejection, which is a typical divergence, indicating hidden buying strength that often appears before an upward trend.
"Considering the bullish nature of the price action, I believe we will see a high point before any meaningful pullback," they added.
Ethereum's price has mostly stayed above $3,000 over the past five days but has failed to break through the $3,200 resistance level.
In the last 24 hours, the asset has consolidated around the $3,050 line and remains in that area.
Last week, Ethereum's price performance relative to Bitcoin also drew attention, as the Ethereum/Bitcoin trading pair broke through a downward trend line.
Related: Vitalik Buterin proposes introducing Gas futures on Ethereum (ETH) to hedge against the risks of soaring transaction fees.
Original article: “Ethereum (ETH) Supply Contraction Approaches, Exchange Holdings Hit Lowest Level Since 2015”
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