Ethereum’s exchange reserves keep falling, and the chart shows it. When coins leave spot exchanges, sellers shrink and the float gets tight. That pattern often comes before a strong move. The current downtrend in Ethereum exchange reserves mirrors two earlier drops that lined up with big rallies. This setup points to a coming supply squeeze and a bullish ETH price trend that many still ignore.
From 2020 to 2021, ETH reserves slid from roughly 16 million to about 10 million. Price moved sideways at first while gas fees spiked and the network felt clogged. Then demand hit as DeFi and the UNI airdrop drew capital on-chain. ETH price broke out from near $400 to almost $4,800. The supply on exchanges was thin, buyers chased offers, and the chart ripped. That is what a supply shock looks like.
In 2022 to 2023, another sharp outflow ran from ~15 million to ~9 million ETH in the middle of a bear market. FTX failed, banks wobbled, and risk assets sold off. Yet exchange reserves kept bleeding lower. Once macro stress eased, ETH price recovered from near $1,100 to the $4,000 area. The on-chain signal—falling exchange supply—came first. Price followed.
Now in 2024 to 2025, the blue exchange-reserve line in the chart pushes to new lows near 9.2 million while ETH trades around $4,000–$4,500. That means accumulation. Wallets pull coins off exchanges into cold storage, staking, and long-term holds. This is classic whale accumulation and a setup for a supply squeeze. The order books show less resting sell inventory. If buyers press, the path up can open fast.
Technical levels line up with this on-chain story. The $4,480–$4,500 zone marks key resistance from prior highs and options strikes. Above that, momentum traders eye $4,650, then $4,800, and finally a round-number magnet at $5,000. The ETH price sits above the 200-day moving average and rides a series of higher lows since late 2023. The RSI holds in a healthy range with no blow-off spike. Funding on major derivatives venues stays near flat, so leverage is not extreme. This is the kind of base that can power a breakout when supply is tight.
Why would reserves fall now? Staking remains sticky, with a large share of ETH locked to secure the network. EIP-1559 continues to burn fees during active periods, which supports a lean, sometimes deflationary, supply. Layer-2 adoption drives real usage, spreads fees, and keeps developers building. Institutions look at ETH as yield plus growth: a smart-contract platform with cash-flow-like burn and staking rewards. If U.S. or global spot ETF flows expand over time, that becomes a steady bid that pulls coins out of circulation. Each of these forces lowers liquid supply on spot exchanges and adds to the supply shock risk.
The ETH/BTC ratio has started to base near multi-year support. When that ratio turns up during bull phases, capital rotates from Bitcoin to large caps with strong catalysts. Ethereum fits that profile. On-chain active addresses, stablecoin flows, and DEX volumes show a slow grind higher, not a blow-off. That kind of steady tape often precedes a fast leg when a trigger hits.
Risk management still matters. If ETH loses $3,700–$3,800, the structure weakens and the breakout delays. But as long as price holds above rising moving averages and exchange reserves keep trending down, the bullish thesis stands. The order book shows air pockets above $4,500. A clean daily close over that level can draw momentum funds, systematic trend models, and options hedgers. That flow can push toward $4,800 and $5,000 with speed because sellers have fewer coins to offer.
For search interest and education, note the core terms investors follow: Ethereum exchange reserves, ETH price prediction, supply shock, exchange outflows, on-chain data, support and resistance, 200-day MA, RSI, open interest, funding, whale accumulation, staking, EIP-1559 burn, deflationary supply, Layer-2 growth, and ETF inflows. These are the signals traders and analysts use to gauge the next move.
Each prior drop came before a strong rally. Today we have the same on-chain pattern, a constructive technical base, and improving liquidity. If buyers step through $4,500, the next targets are $4,650, $4,800, and then $5,000. With fewer coins left to sell, Ethereum looks primed for price discovery.
