Ethereum's Supply Squeeze Hints at Imminent Bull Run as Exchange Reserves Dwindle Despite Ethereum (ETH) prices remaining relatively stable between $4,200 and $4,500 after hitting a peak of $4,956 on Binance, recent data suggests a significant shift that could signal a bullish breakout. A sharp decline in the Binance Exchange Supply Ratio (ESR) indicates a potential supply crunch, as investors move their ETH off exchanges at an accelerated pace.
Price Stability Amid Declining Exchange Supply
According to an analysis by CryptoQuant contributor Arab Chain, Ethereum's Binance Exchange Supply Ratio (ESR) plummeted from 0.041 to 0.037 between August 16 and September 3. This substantial drop, the largest observed in the period, has historically been a precursor to strong upward price movements. Lower exchange liquidity typically limits sellers' ability to depress prices, with current ESR levels mirroring pre-June figures. This trend suggests that previous profit-taking has largely concluded, and investors are now reaccumulating ETH into long-term cold storage.
Indicators Point to a New Bull Cycle
Analysts are now suggesting that if ETH's ESR continues its descent without a corresponding fall in price, the market could be on the cusp of a new, institutional investor-led bull cycle. Several key metrics support this outlook: a noticeable reduction in market leverage suggests fewer speculative positions, while perpetual futures markets show neutral funding rates for ETH contracts. Furthermore, on-chain activity reveals that major ETH holders ("whales") are not actively selling, reinforcing the long-term holding sentiment. Adding to the bullish fundamentals, Ethereum's blockchain continues to strengthen, with over 36 million ETH currently staked on the network, raising the prospect of an impending supply shock. These developments, coupled with Ethereum's daily transactions recently hitting a 12-month high, are fueling ambitious price predictions from industry experts, even as ETH currently trades at $4,295, down 1.7% in the last 24 hours.
