Ethereum and Bitcoin exchange reserves hit record lows as long-term holders increasingly opt for self-custody and staking.
Declining exchange supply and rising prices signal reduced sell pressure and growing confidence in long-term crypto asset holding.
Shrinking liquidity on exchanges points to maturing investor behavior and sets the stage for potential bullish price momentum.
Ethereum and Bitcoin exchange reserves have fallen to record lows. Ethereum exchange supply on May 14, 2025, fell to 4.89%, a record low. Bitcoin supply fell to 7.1%, a level since November 2018. This continuous decline shows increasing self-custody and long-term holding patterns. Moreover, the supply drop coincides with a spike in Bitcoin's price to $104,000 on the same day.
Investor Behavior Points to Long-Term Holding
The drop in exchange supply indicates growing confidence among long-term holders. Ethereum’s share on exchanges stood near 15% in May 2020. It has since declined more aggressively than Bitcoin. By late 2022, both assets began experiencing faster withdrawals. Consequently, this behavior reflects a strategic move toward self-custody and staking.
Source: Cointelegraph(X)
Moreover, Ethereum’s rise in staking strengthens its network security while supporting long-term growth. However, it may also increase market volatility due to lower circulating liquidity. Bitcoin’s supply, which hovered near 17% in 2020, has also seen a consistent downward trend. This marks a clear inverse relationship between price and exchange supply.
Market Impact and Trading Implications
Besides price appreciation, the declining exchange supply introduces new trading challenges. Lower liquidity leads to wider spreads and sharper price swings. This shift benefits long-term holders but complicates short-term trading strategies. However, it reduces immediate sell pressure, which supports stronger price floors.
Additionally, the trend suggests reduced reliance on centralized platforms. It reflects a maturing crypto investor base and a shift in asset management. Hence, the market now leans toward safer, long-term storage rather than active trading. Furthermore, continued outflows could set the stage for future bullish momentum.
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