What You don’t realize yet: ETH supply on exchanges is drying up fast

ETH has been through a rough couple of days, dropping to around $3,448 during the recent flash crash. Panic was visible everywhere – liquidations, forced selling and emotional exits. But while the noise dominated headlines, whales were doing the opposite: quietly buying the dip.

Exchange reserves have now fallen to their lowest levels in nearly 9 years – a point not seen since 2016. Less ETH on exchanges means fewer coins ready to be sold into the market and historically that kind of setup often precedes major supply squeezes once demand returns. The last time we saw similar reserve levels, ETH was on the verge of one of the strongest bull cycles in its history.

On-chain data confirms what's happening under the surface – large wallets have been accumulating heavily in the $3.3K-$3.5K zone, institutional desks have been active again through ETFs and OTC channels and the number of addresses holding over 10K ETH just reached a new yearly high. These are not short-term speculators – these are long-term players positioning early.

A lot of traders got wiped out in the recent volatility because they were overleveraged, chasing moves instead of letting the market come to them. Despite all the people that got rekt, these shakeouts are opportunities. When everyone's forced to sell, that's when patient capital steps in. Even though I didn't have spare fiat ready this time, I borrowed against my holdings on Nехо, picked up more ETH around $3.7k and that position is already in profit with ETH back $4.2k+. It's a more disciplined way to stay exposed – no liquidation risk, no panic. On top of that the platform's current yields across major tokens (as shown on CoinMarketCap) are among the most competitive, which helps offset borrowing costs while your assets continue working for you.

With exchange reserves shrinking, whale accumulation rising and macro conditions improving – falling rates, strong ETF inflows and renewed corporate interest in ETH's ecosystem – the setup for the next leg up is quietly forming. Add in the upcoming Fusaka upgrade later this year and both fundamentals and sentiment seem aligned for another strong phase.

Whether ETH hits $6K by the end of the year or early 2026 doesn't matter, cuz it looks like we're in the early innings of that move. Like I said – supply is drying up, conviction is rising and fear is still widespread – historically, that's been the best time to build positions. Chin up – if you didn't get wiped in the flash crash keep in mind the best is yet to come.