Ether Supply Squeeze Looms With Exchanges Holding Lowest Levels...

Ether exchange balances dropped to a decade low of 8.7% as more ETH moved into staking and custody, setting up a potential supply squeeze.

The amount of Ether stored on centralized crypto exchanges is at an unprecedented low, which could result in a supply squeeze, say analysts.

Ether (ETH) exchange balances fell to 8.7% on Thursday last week, the lowest they have been since the network launched in mid-2015. The amount of the asset held on exchanges remained low at 8.8% on Sunday, according to Glassnode data.

The amount of ETH on exchanges has declined by 43% since the beginning of July, which was around the time when digital asset treasury (DAT) purchasing started ramping up.

“ETH is quietly entering its tightest supply environment ever,” commented macro investment research feed “Milk Road,” which added that it was “a level we’ve never seen before.”

Compared to this, the amount of Bitcoin on exchanges was higher, at 14.7%, according to Glassnode.

ETH keeps getting pulled into places that don’t sell, such as staking, restaking, layer-2 activity, DATs, collateral loops, and long-term custody, added Milk Road, suggesting that a supply squeeze could drive price momentum.

Analyst “Sykodelic” said on Friday that there was an On-Balance Volume (OBV) — a volume-based momentum indicator — breakout above resistance.

However, the price was rejected, which is a classic divergence signaling hidden buying strength that often precedes upside moves.

Related: Why CFTC-approved spot Bitcoin, Ethereum trading is a 'massively huge deal'

Source: CoinTelegraph