On-chain data reveals that the Exchange Supply Ratio of Ethereum on Binance has dropped sharply in recent days, reaching a multi-week low.
This metric represents the proportion of Ethereum held on Binance relative to its circulating supply.
When this ratio declines, it typically indicates that investors are withdrawing ETH from the exchange, possibly moving it to cold storage or DeFi platforms — both of which suggest lower immediate selling pressure.
This drop is especially noteworthy on Binance, which hosts the highest levels of liquidity and daily trading volume in the entire crypto market.
A reduction of ETH supply here reflects a macro-level shift in sentiment among large traders and retail participants alike.
Historical Case Study: April 11 Rally
A compelling example of how this dynamic has played out in the past occurred around April 11.
In the days leading up to this date, the Exchange Supply Ratio on Binance declined significantly.
Shortly after this drop, ETH’s price experienced a sharp rally, jumping from below $1,700 to around $1,950 — a move of over 14% in less than a week.
New Liquidity Pools Forming Above $1,900:
At the same time, liquidation heatmaps reveal a rapid buildup of short liquidation clusters above $1,900 — especially between $1,900 and $2,000.
This sharp increase is likely driven by retail traders opening aggressive short positions during ETH’s recent sideways range.
It becomes increasingly likely that ETH could experience a price push engineered by larger players to target those liquidity pools.
Conclusion
The conditions are aligning for a potential short squeeze, with $1,900–$2,000 acting as a high-liquidity magnet.
As ETH supply on Binance continues to fall, the cost to push the price upward diminishes.
Ethereum's shrinking exchange supply reduces sell-side resistance and increases the likelihood of an upward liquidity hunt.
Written by Amr Taha
