Ethereum (ETH) Supply on Exchanges Hits Its Lowest Level in Nearly a Decade

Ethereum’s supply on cryptocurrency exchanges has fallen to its lowest level in nearly a decade, but the price continues to struggle amid broader market challenges.

The second-largest cryptocurrency, Ethereum (CRYPTO: ETH), has seen its supply on cryptocurrency exchanges fall to the lowest level in nearly a decade. However, despite this bullish signal, the price continues to struggle amid broader market challenges.

Here's a look at what's happening with Ethereum and what analysts are saying about the potential for a supply shock.

What Happened: As crypto analytics platform Santiment pointed out, Ethereum's available supply on exchanges has now dropped to 8.97 million. This marks the lowest level since November 2015.

"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," Santiment said.

This reduction in supply suggests that investors are moving their ETH into cold storage wallets for long-term holding or transferring tokens to DeFi and staking platforms rather than keeping them available for immediate trading on exchanges.

When supply decreases on exchanges, it typically reduces selling pressure. With fewer tokens available for trading, conditions for a potential "supply shock" could emerge if demand remains strong or increases.

Earlier this year, Bitcoin (CRYPTO: BTC) hit a new all-time price high after hitting seven-year lows in January. Several analysts believe that a similar scenario could play out with Ethereum.

"Just a question of time before the big supply shock," said Crypto General.

Another commenter, Ted, said that with ETH supply on exchanges dropping daily, "buyers will soon compete, leading to bidding wars."

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Why It Matters: A few analysts are setting a price target of $6,000 for Ethereum in 2025.

For perspective, a move to $6,000 would be a 200% gain from Monday's price of $1,990.

At the beginning of the year, several analysts were bullish on Ethereum setting a new all-time high in 2025. While Bitcoin and some other cryptocurrencies have hit new highs in recent months, Ethereum has struggled to do so.

The second-largest cryptocurrency by market capitalization reached around $4,000 on several occasions but was rejected before it could approach its November 2021 peak of $4,878. From the highs of the year, Ethereum is down around 50%.

Ethereum's cryptocurrency market dominance has also fallen from over 22% in early 2024 to less than 9%.

One factor that could be impacting Ethereum's performance is the increased competition from layer-2 networks, which process transactions more cheaply than the Ethereum mainnet.

According to DeFiLlama data, Ethereum-based decentralized exchange protocols handled $9.8 billion in the past week. Of that amount, $5.67 billion was from Arbitrum and Base, highlighting the shift to layer-2 solutions.

Monthly DEX volume on Ethereum fell from $92 billion in December to $82 billion in February and March volumes are expected to be even lower.

The lower mainnet usage also impacted Ethereum's fee revenue, which went from $218 million in December to just $46 million in February. While the recent Dencun upgrade reduced gas fees by 95%, making transactions less costly, overall revenue continues to fall.

The total value locked in Ethereum has also fallen from $76 billion in December to $46 billion. The metric tracks how many assets are being used in the Ethereum ecosystem.

Institutions don't appear interested in Ethereum as the New York Stock Exchange and Chicago Board Options Exchange both submitted applications to the SEC to permit staking in Ethereum ETFs, which could increase institutional involvement.

From a technical perspective, Ethereum is trading with resistance at $2,042 and the 50-day moving average providing a barrier. The relative strength index is at 41.22 and shows recovery from oversold conditions, but no strong momentum.

If Ethereum breaks above $2,042, the next price targets could be $2,163 and $2,370. If the cryptocurrency fails to hold $1,986, it may fall to $1,714, where previous buying interest emerged.

"Either Ethereum bounces here and this is a generational bottom, or it’s over," said crypto analyst Scott Melker.

The coming weeks could prove crucial for what happens next with the Ethereum price.