Yeliz Akmaca 
A significant shift is occurring in the cryptocurrency market. According to Santiment’s data, Ethereum’s supply on exchanges has fallen below 4.9% for the first time in history. Bitcoin’s supply on exchanges has also dropped to 7.1%, a level not seen since November 2018. This indicates that investors are withdrawing their assets from exchanges, favoring long-term holding (HODL) strategies. A declining supply on exchanges could reduce selling pressure and support upward price movements.
Why Is Exchange Supply Decreasing?
Investors are moving Ethereum and Bitcoin off centralized exchanges. Santiment reports that over the past five years, 1.7 million BTC and 15.3 million ETH have been transferred from exchanges. This suggests a preference for storing assets in cold wallets. Security concerns, long-term investment expectations, and participation in decentralized finance (DeFi) projects are driving this trend. Lower exchange supply reduces liquidity and supports potential price increases. Additionally, Santiment highlights a 20% increase in Ethereum’s Layer-2 solution activity as a key factor strengthening this movement. Whales are also playing an active role, with Ethereum whales accumulating an additional 450,000 ETH, bringing their total holdings to 40.75 million ETH.
📉 Ethereum has under 4.9% of its supply on exchanges for the first time in its 10+ year history. And Bitcoin's supply on exchanges is down to just 7.1% for the first time since November, 2018.
🗓️ Over the past 5 years, there is:
👉 1.7M less Bitcoin on exchanges
👉 15.3M less… pic.twitter.com/kKn9s1m2mC— Santiment (@santimentfeed) May 19, 2025
According to SoSoValue, U.S. spot Ethereum ETFs recorded a net inflow of $30 million over the past month, marking the first positive flow after a prolonged period of outflows. During the same period, BlackRock’s Ethereum funds surpassed $2.9 billion in total assets under management.
What Does This Mean for the Market?
A declining exchange supply creates a perception of scarcity in the crypto market. Santiment notes that this reduces selling pressure and creates potential for price increases. ETH exchange supply dropping below 4.9% signals strong confidence in the Ethereum ecosystem. Bitcoin’s 7.1% supply level paints a similar picture. However, the impact on prices depends on macroeconomic factors. Interest rates, regulatory developments, and market sentiment will shape the outcome of this trend. Santiment’s data indicates that investors are committed to HODL strategies and avoiding short-term sales, reinforcing expectations of a long-term bullish outlook in the crypto market.
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