Ethereum (ETH) exchange reserves on Binance have undergone a significant decline throughout 2025, falling from a peak above $20 billion earlier in the year to around $12 billion by late December. This drawdown occurred even as the ETH price maintained elevated levels, trading near $3,100. The data suggests a decoupling of supply and price, with reduced visible exchange liquidity potentially signaling tightening available supply as the market approaches 2026.
Binance's share of total Ethereum exchange reserves remained stable, fluctuating between 21.5% and 25% over the last six months, with a recent reading near 23.5%. This indicates the reserve movements reflect a broad market contraction rather than a redistribution across exchanges.
Concurrently, on-chain data reveals a notable capital rotation from Bitcoin to Ethereum. A prominent whale has been aggressively swapping BTC for ETH, converting a total of 1,969 BTC (worth approximately $177.9 million) into 58,149 ETH (worth $181.4 million) over recent days. This behavior signals a rising risk appetite among large investors, who are betting on higher future returns from Ethereum.
Supporting this shift, Ethereum's Fund Market Premium has turned positive for two consecutive days, indicating institutional-style accumulation where buyers are willing to pay above the asset's actual value. Furthermore, Ethereum's Exchange Netflow has remained negative for five straight days, with a recent outflow of -32k ETH, pointing to aggressive spot accumulation and withdrawals from exchanges.
Despite these bullish demand signals, the market structure remains bearish in the short term. Technical indicators like the Directional Movement Index (DMI) have dipped into negative territory, suggesting bearish dominance. Analysts note that if current conditions persist, ETH could lose the $3,000 support level and drop toward $2,800. A sustained accumulation spree, however, could help ETH close above key resistance levels and signal a potential trend reversal.
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