Ethereum Nears Bottom as Stablecoin Reserves Fall!

Stablecoin reserves on major exchanges fell 14% to $64.5B as analysts track signals for a possible Ethereum bottom window.

Ethereum may be approaching a key price window as stablecoin reserves on major exchanges decline.

Market data shows a pattern similar to the 2022 cycle. ETH has fallen 37% amid a broader sell-off, and analysts are tracking liquidity metrics, especially shrinking stablecoin reserves, to assess whether a potential bottom could form soon.

Stablecoin Reserves Shrink Across Major Exchanges

Stablecoin reserves held on major crypto exchanges fell 14% over the past three months.

Holdings declined from $75 billion to $64.5 billion by mid-February 2026. Data from Whale

Alert shows Binance recorded the largest outflows during this period. Binance’s stablecoin reserves dropped from $50.9 billion in November 2025 to $41.8 billion in mid-February.

This marked the longest consecutive outflow streak since the 2023 bear market. 

As expected, the sell off played out similarly as in 2022 & ETH has dropped an additional 37% from the quoted post

Defo a room for a bit more both % & time wise but likely not that more either, using the prior situation.

If we were to follow 2022, ETH could be bottomed in the… https://t.co/p376xcY458 pic.twitter.com/kR077u6tdc

— JACKIS (@i_am_jackis) February 22, 2026

Recent figures show a partial rebound to $47.5 billion, suggesting a pause in withdrawals. Stablecoins serve as a proxy for deployable capital in crypto markets.

They support trading activity, leverage, and cross-chain transfers. A lower reserve base can reduce available liquidity on exchanges.

Analysts state that thinner liquidity may lead to sharper price swings.

Social media alerts and insolvency fears also fueled panic withdrawals. At the same time, traders shifted funds to lending protocols and decentralized finance platforms.

Ethereum and XRP reserves on Binance declined during this stretch. BNB Chain recorded $219 million in net liquidity outflows over three months.

Liquidity Metrics and ETH Price Trends

Ethereum’s recent price decline follows a pattern seen in 2022. During that cycle, ETH formed a bottom as liquidity metrics weakened.

Some traders now compare the current reserve drawdown to that earlier period. Market participants track stablecoin velocity and exchange inventories to gauge market health. 

Lower stablecoin balances may limit the market’s ability to absorb large sell orders.

Analysts note that liquidity constraints can amplify volatility in risk assets. Despite the reserve decline, some data points show stabilization.

Binance’s partial reserve recovery indicates that outflows have slowed. 

Exchange yield programs were introduced to retain liquidity, though they did not stop earlier withdrawals.

The comparison with 2022 remains a reference point for traders. Historical patterns show that liquidity contraction often precedes price stabilization.

However, the stablecoin market cap remains only one data set among several indicators.

Related Reading: Vitalik’s Secret ETH Sell-Off: Millions Gone, What’s Next?

Broader Capital Flows and Market Signals

The contraction in stablecoin reserves reflects broader capital reallocation trends.

Research indicates that yield-bearing stablecoins may divert funds from traditional bank deposits. This shift can alter liquidity distribution between crypto platforms and banks.

Banks, especially regional institutions, face competition from digital asset products. Rising stablecoin adoption may limit traditional lending capacity.

These shifts occur alongside changing investor risk appetite. Within crypto markets, stablecoins function as settlement assets and collateral. 

A shrinking supply can reduce leverage availability and trading depth. Analysts continue to monitor leverage costs and exchange balances for further signals.

The current setup places focus on whether Ethereum is approaching a bottom window. Historical parallels with 2022 remain under review.

Market observers continue to assess stablecoin flows alongside price action to determine the next phase for ETH.