ETH exchange supply shrinks as staking grows amid sideways price

Ethereum (ETH) has recently experienced a prolonged period of consolidation, marked by sustained sideways price movement. Despite this apparent market stagnation, underlying supply dynamics indicate a rapidly tightening structural foundation driven by two key trends: the relentless growth of staking and a significant reduction in assets held on centralized exchanges (CEXs).

Data confirms that the amount of ETH locked in the staking contract continues to climb steadily, currently representing approximately 26% of the total circulating supply. This commitment signifies a strong long-term conviction from holders, effectively removing a massive tranche of supply from immediate trading availability and increasing the cost basis for remaining tokens. Since the Shanghai upgrade enabled withdrawal flexibility, staking entry rates have remained robust, suggesting high confidence in network security and yield stability.

Simultaneously, ETH balances residing on exchanges have reached multi-year lows. This metric suggests that investors are actively moving their assets into self-custody or staking protocols, reducing the pool of tokens instantly available for sale. The confluence of growing illiquidity via staking and the exodus from exchanges severely constrains potential selling pressure.

While the current flat price action reflects broader macroeconomic caution, these structural shifts imply that the market is efficiently absorbing current supply. Should demand increase, the severely tightened circulating supply environment is highly likely to lead to reduced slippage and rapid upward price adjustments, setting the stage for a strong bullish breakout once market momentum returns.

Source: ETH exchange supply shrinks as staking grows amid sideways price