While Ethereum’s price faces clear downward pressure, trading near $2,836 with a 24-hour decline of approximately 3.8%, a more profound and potentially bullish transformation is occurring beneath the surface. The proportion of ETH held on centralized exchanges has plummeted to its lowest level in nearly a decade, signaling a significant change in holder behavior for the world’s second-largest cryptocurrency.
Record Exodus from Trading Platforms
Data reveals a striking trend: the Exchange Supply Ratio (ESR), which measures the amount of Ethereum on exchanges against its total supply, has dropped to just 0.137. This marks the lowest reading since Ethereum’s early years nine years ago. Examining specific platforms underscores the movement; for instance, the ESR on Binance alone has decreased from 0.038 in mid-2024 to roughly 0.0325.
Market researchers at CryptoQuant interpret this sustained outflow as an indicator of growing caution among traders and a reduction in immediate selling pressure. The migration of ETH from exchange wallets to private custody is a pattern historically associated with accumulation phases, where investors move assets off exchanges with longer-term holding intentions.
Long-Term Holders Consolidate Supply
This shift is further amplified by substantial institutional accumulation. Public treasuries and government entities now hold an estimated 6.71 million ETH, valued at around $19 billion. Spot Ethereum ETFs contribute another significant stake, accounting for 6.22 million ETH. When combined with the nearly 36 million ETH currently locked in staking contracts, a vast portion of the circulating supply is effectively in the hands of long-term-oriented participants.
Technical Upgrade Enhances Network Efficiency
On the network development front, the Fusaka upgrade was successfully implemented on December 3. Its cornerstone innovation, Peer Data Availability Sampling (PeerDAS), allows network validators to verify blockchain data through sampling techniques rather than downloading complete datasets. This advancement is projected to reduce data burdens by up to 85%, significantly lowering the barriers to operating a node.
Concurrently, the network’s gas limit was increased from 36 million to 60 million, enabling a substantially higher number of transactions per block. This enhancement provides direct benefits to Layer-2 scaling solutions like Arbitrum, Base, and Optimism, with developers anticipating associated cost reductions of 40% to 60%.
Should investors sell immediately? Or is it worth buying Ethereum?
Leveraged Positions Face Substantial Risk
The current market setup presents considerable danger for leveraged traders. Analysis of liquidation levels shows that if ETH price climbs above $2,971, it could trigger the forced closure of short positions worth approximately $1.3 billion. Conversely, a drop below $2,692 would likely liquidate long positions valued at around $681 million.
This volatility is already manifesting; over the past day, perpetual futures contracts totaling over $162 million have been liquidated, with long positions accounting for roughly $130 million of that sum.
Mixed Signals Amid DeFi Resilience
Technical indicators point to continued selling pressure, with the Relative Strength Index (RSI) sitting at 42. While this suggests bearish momentum, it does not yet indicate oversold conditions. The Moving Average Convergence Divergence (MACD) also remains in negative territory.
Despite these price-based signals, Ethereum’s decentralized finance (DeFi) ecosystem demonstrates notable strength. The Total Value Locked (TVL) across Ethereum protocols currently stands at $72.64 billion. The ongoing migration of liquidity and activity to Layer-2 networks is a key factor contributing to the drawdown of exchange reserves.
For a decisive bullish reversal to take hold, Ethereum must overcome a critical resistance zone between $3,025 and $3,050. As long as the price trades below this threshold, the near-term technical outlook remains fragile—even as on-chain data paints a contrasting picture of steadfast accumulation and supply withdrawal.
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