None of this happened in a liquid market.
Offer held on exchange by Ethereum fell back to levels last seen in mid-2016. According to data from CryptoQuant, total ETH reserves across all exchanges stand at around 16 million ETH. This matches the same spot supply seen during Ethereum’s first full year of trading.
At the time, ETH was barely created. Today, it is a multi-billion dollar ecosystem.
Source: Cryptoquant
The contrast with Bitcoin (BTC) is interesting. While BTC exchange balances have rebounded to 2019 levels, Ethereum has moved in the opposite direction. OTC balances have increased somewhat, but remain small relative to FX supply.
If trading liquidity continues to decline (while large players divest), price discovery could become unstable.
However, not everyone is moving away. Even so, Tom Lee-backed Bitmine added 20,000 ETH worth $41.98 million on February 8. Separately, the Infini operator also bought the dip, spending 13.32 million DAI to acquire 6,316 ETH at $2,109. This was before routing the funds through Tornado Cash.
ETH Weakness in Times of Low Liquidity
Ethereum was trading at $2,077 at press time. The token was down from recent highs near $3,300, a decline of around 37%. The daily RSI was at 31.22.
Trend strength was still high, with the ADX at 50.01. Downward pressure dominated as –DI (35.77) remained well above +DI (6.78).
Source: TradingView
Sales volume increased during the decline, with daily volume near 39.7K ETH.
Final Thoughts
- Ethereum falls with exchange balances at 16 million ETH.
- Even modest flows could move prices aggressively.
