Ethereum’s Supply on Exchanges Hits 11-Year Low: Why Price Could Become Sensitive?

Ethereum’s supply ready for sale on exchanges has decreased by 73% since its peak in June 2020, falling to 6.06 million ETH.

According to Santiment data, the amount of ETH held on exchanges has declined from a peak of 22.9 million ETH in June 2020 to 6.06 million ETH today.

This shift means that the amount of ETH near exchange order books and easily sellable has decreased by 73%. In the chart shared by Santiment, the current level is shown as “11-year lows.”

ETH on exchanges is decreasing, price sensitivity could increase

Santiment attributes the supply withdrawal to areas such as staking, ETF products, institutional treasury strategies, and long-term custody. Validators wishing to contribute to network security are also locking up their ETH, reducing the amount ready for trading on exchanges.

Santiment states that having less ETH on exchanges constricts sell-side liquidity. In such an environment, demand may not need to reach extraordinary levels. As the number of coins waiting for sale on exchanges decreases, smaller buying waves can create sharper movements in price. This assessment indicates that the narrowing supply could make ETH price movements more sensitive.