Ethereum’s exchange supply has plummeted to a critically low level of 8.97 million ETH, the most we have seen since November 2015.
This was reported recently by Santiment, which is a blockchain analytics firm. No matter how you slice it, this is a significant drop. What’s more, it pretty much coincides with falling on-chain activity across the board. This isn’t a direct commentary on Ethereum’s fundamentals, but it is concerning. After all, liquidity could be an issue for basically anything that has been liquidated right now in this ongoing bear market.
Ethereum’s Exchange Supply Hits 9-Year Low✅$ETH supply on exchanges has dropped to 8.97M $ETH, the lowest since November 2015, according to Santiment. Investors continue moving $ETH to cold storage, reducing available liquidity. pic.twitter.com/9dT9Fmduve
— Christiaan (@ChristiaanDefi) March 22, 2025
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Decreasing Exchange Supply Signals Investor Confidence
The consistent trend has been a gradual but steady supply reduction in Ethereum at the exchanges. At present, the 8.97 million ETH available on exchanges marks a sharp decline from those previous levels, and it represents a burgeoning trend of investors increasingly opting for Ethereum storage solutions that are either secure or long-term. One major such solution, cold storage, is favored by many because it allows Ethereum and other crypto holdings to be immensely well-protected from the dangers that centralized exchanges and their custodians often pose.
Interpreting this shift as a sign of increasing investor confidence in both Ethereum and the broader cryptocurrency market could be warranted. After all, moving an asset into cold storage is not something traders do when they expect short-term profits.
“Not having your assets on an exchange is one way to avoid potentially losing them in a crisis situation,” said Andrew Durgee, a co-founder of the cryptocurrency investment fund Lynx. “And as we all know, exchanges can be somewhat crisis-prone.”
Nevertheless, this reduction in supply on exchanges could also result in a reduction in liquidity, consequently making it more challenging for a trader to perform a large execution without causing a significant impact on market price. With even fewer tokens available for trade on exchanges, the possibility of price volatility increases, especially in a fast-shifting market. That puts even more of an onus—if that’s not already clear—for Ethereum’s short-term price performance on bull or bear market conditions that make the market more or less sensitive to large buy or sell orders.
On-Chain Activity and Fee Reductions
Despite the decline in the supply of Ethereum available on exchanges, on-chain activity has also seen a notable decline. According to some stats, we might be seeing our second wave of ETH burns! There’s certainly less activity on-chain, which generally includes everything from DeFi to NFTs to smart contracts. A 50% reduction in fees got a few folks worried and got some folks talking!
The decrease in Ethereum fees is concerning, as it may indicate a decrease in the demand for transactions on the network. Ethereum has long been known for its high levels of activity, driven by its role as the backbone of DeFi, NFTs, and other dApps. A slowdown in activity could signal that users are either temporarily shifting away from the platform or that there’s a decrease in the demand for Ethereum-based services.
The total amount of ETH fees decreased by 50% this week as on-chain activity continued to slow down pic.twitter.com/dbrrQmnhdR
— IntoTheBlock (@intotheblock) March 21, 2025
This slowdown may be due to several things. One possible reason could be that the broader market is—like the overall cryptocurrency market—volatile. When the markets are uncertain, users may be cautious about their transactions. And when users are careful, that’s not a good recipe for transaction growth. But anchor addresses and blockspace aren’t the only places where Ethereum may be seeing slowdown. A potentially bigger concern is that competition for users from other platforms has intensified.
Those platforms include blockchain rivals such as Solana and Binance Smart Chain, as well as Layer 2 solutions like Optimism and Arbitrum. These competitors have been attracting users with lower costs and faster confirmation times.
Ethereum Spot ETFs Continue to See Outflows
Apart from the dwindling supply in exchanges and on-chain participation, Ethereum spot ETFs have taken a turn for the worst. As of March 21, the total net outflow from Ethereum spot ETFs was $18.63 million, marking the 13th straight day of net outflows for the fund. This also suggests that investor sentiment toward Ethereum is not exactly warm right now.
On March 21, Bitcoin spot ETFs saw a total net inflow of $83.0919 million, marking six consecutive days of net inflows. In contrast, Ethereum spot ETFs experienced a total net outflow of $18.6309 million, continuing a 13-day streak of net outflows.https://t.co/Hj2Gs48E6C
— Wu Blockchain (@WuBlockchain) March 22, 2025
Institutional investors have a more straightforward method to gain exposure to Ethereum through spot ETFs, which are seen as a fairly direct way to engage with the underlying asset. There is a potential broader implication here, though, in that the combined $25 million withdrawn from spot ETFs and the $15 million from Ethereum trust funds might just be a manifestation of investor caution. It is the kind of situation where saying “half a billion dollars” sounds a lot more dramatic than saying “four percent of our total BTC and ETH holdings,” which is what Fidelity said when it was backing out from Ethereum.
Although Ethereum spot ETFs may be experiencing outflows, the current situation must be viewed in the context of the overarching market ecosystem. Today, many investors seem content to keep their capital on the sidelines and off the trading floor during what can only be described as a period of intense market uncertainty. Despite this, I contend that the outflow of capital from ETF products tied to Ethereum doesn’t signify a long-term bearish outlook for either Ethereum or the underlying cryptocurrency ecosystem.
Conclusion: Ethereum’s Future Outlook
Ethereum’s exchange supply falling to a 9-year low and on-chain activity decelerating are important trends that point to a shift in how investors are behaving. While the movement of Ether into cold storage could indicate a long-term bullish outlook, the reduction in network activity and the outflows from Ethereum ETFs suggest murky short-term market sentiment. The combination of these factors underscores the uncertainty that continues to hang over Ethereum’s future.
Even though Ethereum is faced with short-term problems, it is still the main alternative to Bitcoin and is dominant in the decentralized finance (DeFi) world, with many upcoming changes that could address the issues being raised. We spoke with James Beck, director of communications and content at trade association Blockchain Association, to better understand the potential future of Ethereum. Despite slowdowns in the market and reduced liquidity, he sees the Ethereum ecosystem as something that could evolve into a powerful tool.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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