Ethereum's exchange supply has plummeted to its lowest level since 2016, according to analysis from KuCoin Insights reported by @ArabxChain. This significant decline indicates a major shift in trader behavior, with increased caution and a notable reduction in short-term selling pressure. The trend suggests limited sell-side liquidity on exchanges, which could support price stability for ETH if demand remains steady.
The analysis points to a growing "HODL" mindset among investors, evidenced by large withdrawals from exchanges and expanding wallet counts reflecting long-term accumulation. Historically, similar decreases in exchange supply have aligned with strengthened holding behavior and potential upward price movements when external market conditions are favorable.
Simultaneously, U.S. spot Ethereum ETFs experienced substantial net outflows of $98.45 million on January 7, according to data from SoSoValue. This extends a risk-off tone across digital asset investment products. The outflows were widespread across multiple issuers rather than concentrated in a single fund.
Grayscale's ETHE fund led the withdrawals with -$52.05 million (approximately -16,600 ETH), accounting for the largest single-day outflow. Fidelity's FETH followed with -$13.29 million, while Grayscale's ETH trust lost an additional -$13.03 million. Together, Grayscale-linked products represented over half of the total net withdrawals.
Other major funds also saw outflows: BlackRock's ETHA (-$6.64 million or -2,120 ETH), Bitwise's ETHW (-$11.23 million), and VanEck's ETHV (-$4.59 million). The sole exception was Franklin Templeton's EZET, which recorded a modest inflow of +$2.38 million (+759 ETH). Products from Invesco and 21Shares reported flat flows for the day.
The scale and breadth of these ETF outflows—representing tens of thousands of ETH leaving regulated vehicles—suggest a broad reduction in institutional exposure rather than fund-specific rebalancing. This pattern indicates a cautious institutional stance toward Ethereum in the near term, extending selling pressure beyond Bitcoin ETFs.
These diverging signals create a complex picture for Ethereum: while on-chain data shows strong holding behavior among individual investors reducing exchange liquidity, institutional investment vehicles are experiencing significant outflows, pointing to defensive positioning in uncertain market conditions.
