Ethereum supply drops 83% – Can ETH hit $4.2K if THIS happens?

Key Takeaways 

How low have Ethereum reserves dropped on Binance?

The Exchange Supply Ratio fell to 0.032, its lowest since May, signaling reduced sell-side liquidity and strong long-term accumulation.

Why are traders turning more bullish on ETH?

Over $228 million in outflows and an 83% Funding Rate surge show leveraged optimism rising as RSI nears recovery above 50.

Ethereum’s [ETH] Exchange Reserves on Binance steadily declined to a 0.032 ratio, reaching their lowest level since May, a clear sign of tightening liquidity. 

This sustained drop suggested that fewer tokens were available for immediate trading, reducing selling pressure across the market. 

As exchange balances shrink, the likelihood of sharp selloffs diminishes, often signaling that investors are adopting a holding mindset. 

Historically, such drawdowns in the Exchange Supply Ratio have preceded recovery phases as market participants shift toward long-term holding. The latest outflows suggest investors are again positioning for that scenario.

ETH rebounds from support as RSI recovers

Ethereum rebounded sharply from its ascending support near $3,500 after weeks of consolidation. 

This bounce confirmed that buyers regained control at a critical level. The Relative Strength Index (RSI) was around 42 at press time, indicating early signs of recovery from oversold territory, suggesting a fading of bearish momentum. 

A steady rise above 50 would confirm renewed strength and mark a shift toward bullish control. Moreover, the rebound coincided with improved investor sentiment as ETH eyes resistance levels around $3,800 and $4,200. 

If momentum sustains, Ethereum could extend its climb toward $4,827, aligning with broader accumulation patterns.

Source: TradingView

Exchange outflows signal renewed accumulation

Massive outflows exceeding $200 million in a single day reveal a significant wave of accumulation.

Such deep outflows point to accumulation by large holders moving assets off exchanges, a pattern that historically preceded upward price moves. Reduced exchange balances continue to cap immediate sell-side pressure and support a bullish supply-demand setup.

Source: CoinGlass

Funding Rates surge 83% as long traders dominate

Ethereum’s Funding Rates jumped by over 83% at press time, underscoring bullish leverage dominance in Derivatives markets. 

Long traders paid higher premiums to maintain positions, signaling conviction in Ethereum’s upside.

While elevated rates can trigger short-term volatility through liquidations, combined with shrinking exchange supply and heavy outflows, they underscore the broader accumulation trend supporting Ethereum’s mid-term recovery outlook.

Source: CryptoQuant

To conclude, the declining Exchange Reserves, consistent outflows, rising Funding Rates, and a strengthening RSI together highlight a clear resurgence in Ethereum’s bullish momentum. 

These metrics collectively signal that investors are accumulating rather than selling, tightening supply and reinforcing long-term confidence. 

As demand builds and liquidity continues to decline across exchanges, Ethereum’s structure appears increasingly supportive of a sustained price recovery.