Ethereum supply on centralized exchanges has fallen to its lowest level since 2016, according to CryptoQuant, signaling a major shift in investor behavior. With less Ethereum available for immediate trading, analysts say the trend reflects growing long-term confidence and reduced short-term selling pressure.
Investors Move ETH Off Exchanges
According to analytics firm CryptoQuant, Ethereum’s Exchange Supply ratio has dropped to 0.137, marking its lowest level since 2016. Cryptoquant revealed this in an X post today, highlighting a chart that shows how the ETH supply on centralized exchanges has continued to shrink over time.
A look at the supply chart reveals that the ratio has been dropping since 2016, ultimately reaching 0.137. However, by 2023/2024, the supply had dropped to an extremely low level, indicating that ETH on exchanges had become very minimal. By December 2025, the supply ratio has settled at 0.137, the lowest since 2016, indicating that only a tiny fraction of ETH remains on exchanges.
Interestingly, the declining exchange supply can be attributed to the fact that ETH holders are now opting for long-term storage options. Self-custody has gained traction following past exchange failures, reinforcing the idea that “not your keys, not your coins” remains a key principle in crypto markets.
Staking and Deflation Shape Supply Dynamics
Ethereum’s proof-of-stake (PoS) model has significantly reduced the liquid supply of ETH. Millions of tokens are now locked in staking contracts as validators seek yield and support the network’s security. This effectively removes a sizable portion of ETH from active circulation.
At the same time, Ethereum’s fee-burning mechanism, introduced by EIP-1559, continues to reduce the supply. A portion of transaction fees are permanently burned, and during periods of high network activity, ETH burns can exceed new issuance. This has strengthened Ethereum’s deflationary narrative and reinforced its appeal as a scarce digital asset.
Implications for Ethereum
While a falling exchange balance does not guarantee immediate price appreciation, it often signals reduced downside risk. With fewer ETH tokens available on exchanges, sudden sell-offs may be less severe compared to earlier market cycles.
As Ethereum’s exchange supply hits its lowest level since 2016, investors are now watching for catalysts such as spot ETF inflows, layer-2 adoption, and increased institutional participation. If demand continues to grow alongside tightening supply, Ethereum could be well-positioned for notable market moves in the months ahead.
Meanwhile, according to data from asset tracker CoinMarketCap, Ethereum continues to trade below the $ 3,000 region, and is changing hands at $2,851.
The CoinRemark Team
