Ethereum CEX reserves hit their lowest level since 2015, and the market is entering an "extremely scarce" supply state.

On December 7, Ethereum balances on centralized exchanges dropped to a historic low, prompting analysts to warn of a potential supply squeeze. The latest data shows that last Thursday, exchange-held ETH reserves fell to just 8.7% of the circulating supply, the lowest since the network’s launch in 2015. As of Sunday, it remained at only 8.8%, staying near these record-low levels. Since July, the amount of ETH held on exchanges has plummeted by 43%. During the same period, institutional and Digital Asset Treasury (DAT) accumulation has noticeably accelerated.

Research firm Milk Road noted, “ETH is quietly entering the tightest supply environment in its history—something we have never seen before.” In contrast, Bitcoin reserves on exchanges still stand at 14.7%. Analysts believe a significant amount of ETH is now locked in scenarios where it cannot be quickly sold, including:

• Staking & restaking
• Layer 2 activity
• DAT treasury collateral cycles
• Long-term custody

Milk Road stated that the supply squeeze may drive prices higher once sentiment shifts: “Sentiment can be pessimistic, but sentiment cannot change the supply structure. When sentiment and supply diverge, price will ultimately follow supply changes.”

Analyst Sykodelic also pointed out that Ethereum’s OBV (On-Balance Volume) indicator has broken through resistance, but the price was briefly rejected—a classic “divergence” that usually signals hidden buying power and builds momentum for a future rally.