Analyst: ETH exchange reserves at 8-year low, signaling potential for long-term gains

The amount of Ethereum held on exchanges has fallen to approximately 16.2 million ETH, its lowest level since 2016, crypto analyst Arab Chain noted in a contribution to CryptoQuant. The analyst pointed out that Binance's ETH holdings have decreased from 4.168 million to 4 million ETH this month, a trend consistent with a narrowing gap between the asset's price and exchange reserves. This movement signals that investors are opting for long-term storage in DeFi or cold wallets over short-term trading. Arab Chain further explained that while ETH outflows from exchanges are increasing, there has been no significant rise in inflows, indicating weak selling pressure. The decline in reserves on Binance, the world's largest exchange, is a key indicator of a potential market-wide supply shortage. The analyst observed that historically, decreases in exchange reserves have often been followed by medium- to long-term price increases for ETH, suggesting that the current environment could lead to a sensitive price reaction if demand rises.