Ethereum Walks a Tightrope: Staking and Institutions Fuel Volatility Risks

On-chain analytics platforms report that Ethereum’s reserves on centralized exchanges have dropped to their lowest point in nearly a decade, marking a notable change in market trends. Data from Glassnode and CryptoQuant indicates that the volume of

held on exchanges fell to 14.8 million by September 2025—a 52% reduction from the 2020 high of 31 million. This is the smallest exchange supply since 2016, with the exchange supply ratio—ETH on exchanges as a share of total supply—now at 0.14, also a nine-year minimum. This drop is largely due to more staking, increased institutional buying, and the movement of assets to cold wallets or DeFi platforms Ethereum Exchange Supply Plunges 52% as $3,700 Liquidation Risk Looms [ 1 ] Ethereum Supply on Exchanges Hits 9-Year Low Amid Institutional Accumulation [ 2 ] Ethereum Balance Exchanges Hits 9-Year Low—What It Means [ 3 ].

This reduction in exchange liquidity has sparked concerns about increased price swings. Experts point out that with less ETH on exchanges, large deposits or withdrawals can have a bigger effect on price. The 30-day average of

net exchange flows is at its highest since late 2022, showing ongoing withdrawals. CryptoQuant notes that significant withdrawals usually signal a move toward self-custody or DeFi, which lowers immediate selling pressure Ethereum Exchange Supply Plunges 52% as $3,700 Liquidation Risk Looms [ 1 ] Ethereum Supply on Exchanges Hits 9-Year Low Amid Institutional Accumulation [ 2 ]. Still, this thinner liquidity also raises the chance of sharp price drops. Analyst Ted Pillows warned that liquidation pressures are mounting near the $3,700–$3,800 support area, and forced selling could occur if ETH cannot stay above this range Ethereum Exchange Supply Plunges 52% as $3,700 Liquidation Risk Looms [ 1 ].

Institutional interest has sped up the withdrawal of ETH from exchanges. In the last two years, corporate treasuries—including firms like BitMine—have gathered 5.26 million ETH, worth $21.7 billion and making up 4.3% of the total supply. Most of these assets are staked for returns rather than stored on exchanges. At the same time, U.S. spot Ethereum ETFs have acquired 6.75 million ETH, valued at $28 billion, further reducing available liquidity. Together, institutional and treasury holdings now represent about 10% of all ETH in circulation Ethereum Supply on Exchanges Hits 9-Year Low Amid Institutional Accumulation [ 2 ] Ethereum Balance Exchanges Hits 9-Year Low—What It Means [ 3 ]. Analyst Rachael Lucas described this development as Ethereum’s “Wall Street glow-up,” highlighting the growing trust institutions have in the asset Ethereum Balance Exchanges Hits 9-Year Low—What It Means [ 3 ].

Large holders, or whales, have also become more active, with 16 wallets accumulating 431,018 ETH (about $1.73 billion) since mid-September. Major buyers included Kraken, Galaxy Digital, and BitGo, reflecting strong institutional participation. While whale accumulation can help steady the market, it does not remove short-term risks from leveraged trading. Since mid-September, ETH’s price has dropped below $4,000 in early October 2025, an 11% decrease from its recent high, as traders prepare for further volatility Ethereum Exchange Supply Plunges 52% as $3,700 Liquidation Risk Looms [ 1 ] Ethereum Supply on Exchanges Hits 9-Year Low Amid Institutional Accumulation [ 2 ].

The ongoing decline in exchange supply points to a fundamental change in Ethereum’s market function. With fewer coins available for trading, any increase in demand could drive prices higher. However, short-term risks persist, especially if ETH cannot maintain key support levels. While the long-term perspective remains optimistic—thanks to shrinking liquidity and institutional adoption—near-term price stability depends on whether ETH can hold above the crucial $3,700 mark Ethereum Exchange Supply Plunges 52% as $3,700 Liquidation Risk Looms [ 1 ] Ethereum Supply on Exchanges Hits 9-Year Low Amid Institutional Accumulation [ 2 ].