Lowest Ethereum Exchange Supply in 10 Years Recorded
The amount of Ethereum available on exchanges has fallen to its lowest point since November 2015, with only 8.97 million ETH accessible.
As per a March 21 analysis by Santiment, this reduction is primarily attributed to the rising popularity of decentralized finance and staking. The sell pressure has diminished as more holders opt to lock their assets instead of leaving them on exchanges. Ethereum’s (ETH) exchange supply has seen a 16.4% decline over the past seven weeks, indicating a long-term accumulation trend.
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However, this supply reduction has not yet translated into a price increase for Ethereum. ETH has dropped 47% from its December high of $4,105 to a price of $1,990 on March 21, marking it as one of the poorest-performing major cryptocurrencies.
On-chain and technical metrics suggest potential further declines. Analysts at Standard Chartered have recently revised their year-end ETH price target from $10,000 down to $4,000, pointing to intensified competition from other networks, particularly Ethereum layer-2 solutions.
Layer-2 networks are attracting a growing user base by offering lower fees, which in turn reduces activity on the mainnet. Data from DeFiLlama shows that over the past week, Ethereum-based DEX protocols processed a volume of $9.8 billion, with Arbitrum (ARB) and Base handling $5.67 billion of it.
The monthly DEX volume on Ethereum has seen a decline, dropping from $92 billion in December to $82 billion in February, with even smaller volumes projected for March. This reduction in mainnet activity has negatively affected Ethereum’s fee revenue—a crucial aspect of its economic model—falling from $218 million in December to just $46 million in February.
Although transaction costs have been reduced thanks to the Dencun upgrade, which lowered gas fees by 95%, Ethereum’s revenue continues to diminish. The total value locked in Ethereum has also decreased from $76 billion in December to $46 billion as of the latest reporting.
A possible respite for Ethereum could arise from the staking of exchange-traded funds. The New York Stock Exchange and the Chicago Board Options Exchange have both submitted requests to the U.S. Securities and Exchange Commission for permission to allow staking in Ethereum ETFs. Nevertheless, institutional interest remains weak, as Ethereum Spot ETFs experienced $370 million in outflows over the past month.
From a technical perspective, Ethereum continues to decline and is encountering resistance at $2,042. The 50-day moving average serves as an obstacle, and the Bollinger Bands indicate low volatility, suggesting a phase of consolidation.
ETH is showing signs of recovery from oversold conditions, but it lacks strong momentum, with the RSI currently at 41.22. While low trading volume suggests uncertainty among traders, a slight increase indicates some accumulation taking place.
The next resistance levels are $2,163 and $2,370 if ETH manages to break above $2,042. Should $1,986 fail to hold, a decline towards $1,714 may occur, where previous buying interest has been noted.