Will Ethereum Follow Bitcoin? This Data Shows Bullish Signs

In the cryptosphere, where price action is often driven more by psychology than fundamentals,  sometimes it’s the quietest data points that speak the loudest. Right now, one such whisper is echoing across the Ethereum (ETH) and Bitcoin (BTC) landscapes: exchange balances are plunging. But not just dipping, they're diving off a cliff.

Fresh on-chain data from Santiment reveals that Ethereum’s supply on centralized exchanges has reached an all-time low, while Bitcoin’s supply is now at its lowest since November 2018. This isn’t just a stat for the footnotes, it’s a signal that could redefine how both assets move in the coming months.

The Exodus from Exchanges: Ethereum’s Supply at Historic Lows

As the data chart illustrates, Ethereum’s supply on exchanges measured as a percentage of its total circulating supply has undergone a dramatic, unrelenting decline over the past year. This is not a minor adjustment; it’s a tectonic shift in behavior.

What we’re seeing is not just a trend, it's a migration. ETH is flowing out of centralized exchanges and into cold storage, smart contracts, DeFi vaults, staking protocols, and private wallets. This great exodus implies that investors are choosing to hold, not sell. And in crypto, reduced exchange balances often precede supply squeezes and price rallies.

Read Also: 5 Reasons Why ETH Price Will Hit $5000 by End of 2025

The Staking Effect: A New Era for Ethereum

Part of this behavior can be attributed to Ethereum’s evolving utility. Since the Merge, ETH has transitioned into a proof-of-stake (PoS) asset, allowing users to earn passive income by staking their tokens directly on the network.

This has resulted in over 27 million ETH staked, and that number keeps growing. These tokens are effectively removed from liquid circulation, heightening scarcity even further. With fewer ETH available for spot trading, every buy order hits with greater impact.

Add to this the rapid expansion of DeFi, where ETH is locked into lending platforms, liquidity pools, and synthetic asset markets, and it becomes clear: ETH is becoming increasingly illiquid by design.

Read Also: Ethereum Surges Back Above $2,000 – Is This the Beginning of a Major Bull Run?

Bitcoin: Following a Similar Path, with a Lag

Bitcoin, the original crypto bellwether, is telling a parallel story  albeit at a slightly different pace. Its supply on exchanges has also fallen significantly, now reaching its lowest point in more than six years. The implication is the same: reduced selling pressure, increased investor confidence, and a shift toward long-term holding.

Historically, Bitcoin leads the charge during macro crypto bull runs. Its movements often act as the opening act, with Ethereum and altcoins performing the encore. With BTC supply on exchanges bottoming out and institutional inflows rising (especially via ETFs), this pattern could play out once again, but with ETH potentially stealing the spotlight this time.

Read Also: Interpreting Trader James Wynn's Move to Reduce His Bitcoin

Why Exchange Supply Data Is So Important

The logic here is simple but powerful. When coins sit on exchanges, they’re just a few clicks away from being sold. But when they’re withdrawn to private wallets, they become inert — at least temporarily.

This “illiquidity” has a direct effect on market dynamics:

• Lower exchange supply = lower immediate sell pressure
  
   

• Tighter supply = higher sensitivity to demand spikes
  
   

• Bullish sentiment = rapid price appreciation

In essence, the crypto market begins to operate like a dry forest in summer — all it takes is a spark.

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The Market Psychology: Confidence Is Creeping Back

This current wave of self-custody suggests growing holder conviction. Whether it’s driven by confidence in Ethereum’s fundamentals, long-term expectations of higher prices, or distrust in centralized platforms, the result is the same — coins are being taken off the table.

Importantly, this trend has not occurred in isolation. It’s happening during a period of gradual recovery in the broader crypto market, as macroeconomic uncertainties stabilize, and as interest returns to digital assets post-ETF approvals and rising regulatory clarity.

With Ethereum’s Layer 2 ecosystem booming and Bitcoin gaining newfound institutional attention, the stage appears set for a major move — and this time, it may be Ethereum leading the charge.

Read Also: Ethereum Foundation Accelerates Ecosystem Growth with $32M in Grants for Q1 2025 – What’s Next?

Historical Patterns: ETH Often Outpaces BTC in Bull Cycles

If history rhymes, we’re approaching the verse where ETH begins to outperform BTC. In past cycles, Ethereum has acted as a high-beta asset, reacting more dramatically to both downside and upside movements.

With Bitcoin’s halving behind us and ETH becoming scarcer on exchanges, we could be on the brink of the next leg up. And this time, with Ethereum’s strong fundamentals and deflationary mechanics post-EIP-1559, it may not just follow Bitcoin — it might surpass it.

Read Also: Whales Are Buying More ETH! Ethereum Price Prediction Is Looking More Bullish

What to Watch Next

• Exchange inflow/outflow ratios: If outflows continue to dominate, bullish pressure will intensify
  
   

• Staking participation: Rising staked ETH increases illiquidity and boosts long-term confidence
  
   

• Institutional ETH products: If an Ethereum ETF gets approved, expect a new wave of demand
  
   

• Bitcoin dominance index: A falling BTC.D may signal ETH and altcoin outperformance

FAQ

Q: Why is Ethereum’s supply on exchanges dropping so sharply?
A: Ethereum holders are increasingly moving their assets into self-custody, staking contracts, and DeFi protocols. This trend reflects growing investor confidence and a preference for long-term holding over short-term trading.

Q: Is a lower exchange balance always bullish for price?
A: While not a guarantee, reduced exchange supply typically suggests diminished sell pressure. If demand remains constant or rises, this scarcity can lead to upward price movement.

Q: How does Bitcoin’s exchange data compare to Ethereum’s?
A: Bitcoin’s exchange supply is also declining, reaching its lowest since November 2018. However, Ethereum’s drop is steeper and more accelerated, indicating potentially stronger bullish sentiment among ETH holders.

Q: Could Ethereum lead the next bull run?
A: It is possible. With reduced exchange supply, deflationary tokenomics, growing staking activity, and expanding Layer 2 utility, Ethereum is well-positioned to outpace Bitcoin during the next bullish phase.

Q: What role does staking play in Ethereum’s price action?
A: Staked ETH is locked away and not available for trading, reducing liquid supply. This contributes to scarcity, which — when combined with demand — can catalyze price increases.

Q: Should investors monitor supply on exchanges?
A: Absolutely. Exchange supply is a key on-chain metric for assessing market behavior, potential selling pressure, and investor sentiment. It often acts as an early indicator of macro trends.

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