Ethereum and Bitcoin are facing a historic supply squeeze as exchange balances for both assets hit record lows in July 2026. Data from Santiment and Glassnode indicates that Bitcoin (BTC) exchange reserves have reached their lowest levels since 2017, while Ethereum (ETH) balances on centralized venues have dropped to a multi-year low not seen since the network’s 2015 launch.
This structural shift reflects a growing preference among investors for self-custody, ETFs, and corporate treasuries. As of July 8, 2026, the amount of Bitcoin held on exchanges remains near 2.70 million BTC, a decline from approximately 2.80 million BTC recorded earlier this year.
Dwindling exchange liquidity and investor conviction
Meanwhile, Ethereum’s network outlook strengthens as its exchange supply reached a record low of approximately 14.5 million ETH by mid-June, down from a 2020 peak of 35 million ETH.
The contraction of “liquid” supply is fundamentally changing market dynamics by reducing immediate selling pressure. For Bitcoin, exchange balances and Short-Term Holder Supply have converged at a similar magnitude of roughly 2.3 million BTC. Together, these metrics represent just 23.8% of the total circulating supply — an all-time low for the premier cryptocurrency.
Ethereum has seen an even more aggressive exodus from exchanges, with the descent accelerating after July 2025. Major platforms like Binance and Kraken are reportedly seeing withdrawals regularly exceeding 120,000 ETH per day. Such persistent outflows suggest that current Bitcoin exchange supply multi-year lows are being mirrored across the broader digital asset market as holders move toward long-term storage models.
This migration is creating a scarcity effect that could amplify price discovery if demand recovers. While lower exchange balances don’t guarantee immediate price surges, they ensure that any significant buying interest meets a much thinner sell-side order book. Institutional and long-term holders are essentially pulling supply out of the reach of daily speculators.
Long-term holders reinforce the Bitcoin supply floor
On-chain data confirms that Bitcoin is transitioning from “weak hands” to strong conviction holders. According to Glassnode, Bitcoin’s illiquid supply reached a monumental high of 14.3 million BTC in September 2025, accounting for more than 70% of the circulating supply. This hoard of dormant coins provides a structural floor, as these holders traditionally resist selling during periods of market weakness.
The Accumulation Trend Score reflects this change, showing steady buying across small and medium-sized wallets despite recent volatility. Furthermore, HODL Waves indicate that older coins are remaining untouched. However, analysts at Glassnode warn that Bitcoin price analysis at resistance levels shows that tightening supply alone is not enough; a sustained uptrend still requires fresh demand to absorb what little liquidity remains.
Institutional accumulation and Ethereum’s technical landscape
Ethereum’s supply dynamics are being further constrained by staking and corporate treasury strategies. Approximately 45% of Ethereum’s supply is currently locked or illiquid, and listed companies now possess over 6.1 million ETH. Jan van Eck, CEO of VanEck, notably described the asset as “the Wall Street token,” signaling a shift in institutional perception toward ETH as a productive financial asset.
While the supply squeeze is historically significant, Ethereum faces a complex technical environment. Network activity has cooled, with active addresses dropping 46% from their early 2026 peak of 795,000. Additionally, US spot Ethereum ETFs experienced over $529 million in net outflows during June 2026, highlighting a mismatch between tightening on-chain supply and current institutional trading sentiment.
As of July 8, 2026, Ethereum is trading at $1,755 after briefly reclaiming the $1,800 mark. Despite the record-low liquid supply, market derivatives currently price in only a 1.2% chance of ETH reaching $10,000 by the end of the year. The coming months will likely determine if this “historic squeeze” leads to the structurally driven market cycle that long-term accumulators are betting on.