28% of Ethereum Supply Staked as Only 10% Left on Exchanges: Is This a Positive Indicator?

Ethereum has reached a significant milestone, with more than 28% of its total supply now staked, according to findings by crypto researcher Leon Waidmann.

Waidmann recently pointed out that ETH staking has reached an unprecedented level, with only 10% of Ethereum currently held on cryptocurrency exchanges. This development underscores the increasing confidence in Ethereum’s future and the community’s commitment to securing the network through staking.

The decline in Ethereum holdings on exchanges, as illustrated in the accompanying chart, has been notable. The percentage has dropped to around 10%, signifying a substantial decrease from previous levels. This trend reflects a shift towards staking and long-term holding, reducing the supply available for trading.

Over the past year, the reserve of Ethereum on exchanges has decreased from approximately 20 million to 17 million. This reduction in reserves has coincided with price fluctuations, including a notable upsurge since early 2024. The pattern suggests that as ETH moves off exchanges, possibly into private wallets or for staking, the price tends to rise, indicating heightened investor confidence and long-term holding.

Market data from CryptoQuant indicates a consistent upward trend in the amount of ETH tokens entering staking contracts over the last year. Currently, more than 33.9 million tokens are locked up, valued at over $111 billion.

The combination of diminishing supply on exchanges and escalating staking rates implies a significant supply squeeze that could impact Ethereum’s price dynamics.

As the supply on exchanges dwindles and more ETH gets locked up in staking, the buying pressure is expected to push prices higher, hinting at a substantial impending price surge, as suggested by Waidmann.

Technical indicators, such as the RSI standing at 56.92, point towards bullish trends, reinforcing a positive outlook for Ethereum. An RSI value above 50 typically indicates a bullish trend, and the current value near 57 suggests Ethereum is in a slightly bullish position, with no extreme buying or selling pressure evident.

Additionally, reactivated Ethereum whales are making significant transfers, some specifically for staking purposes. In a notable instance, a dormant Ethereum whale staked 4,032 ETH, valued at $7.4 million, after more than two years of dormancy. This whale had initially acquired 60,000 ETH during the Genesis block in 2015. These movements underscore substantial on-chain activities, signaling increased confidence in Ethereum’s future.