ETH’s Epic Transformation: Supply Hits Decade Low + Wall Street Titans Open the Gates, the Supercycle Is Imminent

A nuclear-level data point has shattered the crypto market’s silence: the total ETH supply on exchanges has dropped below 9 million, hitting its lowest level since Ethereum’s inception in 2015. This is not due to scattered retail portfolio adjustments, but rather a liquidity “drain war” led by whales and institutions—massive amounts of ETH are being withdrawn from centralized exchanges and moved into staking, ecosystem applications, and other long-term lock-up scenarios. The “liquid” ETH available for immediate sale on the market is nearing exhaustion.

At the same time, a disruptive signal is emerging from Wall Street: Bank of America has officially announced that starting in 2026, more than 15,000 of its wealth advisors will be able to directly recommend Bitcoin and Ethereum ETFs to high-net-worth clients, explicitly advising allocating 1%-4% of assets to crypto. This marks the opening of a “fast lane” for trillions of dollars in traditional finance to enter the crypto market compliantly, shifting institutional adoption from trend to reality.

This extreme reversal on both the supply and demand sides is rewriting Ethereum’s value logic—a long-anticipated supercycle now has all the necessary conditions for eruption.

Supply Side: Supply Drain + Long-Term Lock-Up, Scarcity at New Heights

The sustained plunge in ETH exchange balances fundamentally reflects a deep market consensus shift from “short-term speculation” to “long-term holding,” driven by three core forces that are further tightening supply.

First, institutional staking has become a mainstream allocation. The 3%-4% stable annualized yield from Ethereum’s PoS mechanism, combined with ecosystem appreciation potential, has upgraded ETH from a “speculative asset” to a “yield-bearing asset,” making it a new institutional portfolio staple. By mid-2025, total ETH staked has surpassed 35.3 million, accounting for 29% of total supply. Coinbase alone has $25.97 billion in staked ETH, and companies like BitMine are continually increasing their holdings, adding ETH to their strategic reserves. The EIP-7251 protocol enabled by the Pectra upgrade has raised the validator staking cap from 32 ETH to 2,048 ETH, drastically lowering the cost for large-scale institutional staking and accelerating ETH lock-up.

Second, ecosystem lock-ups are absorbing massive liquidity. Beyond base staking, the DeFi and restaking sectors—despite reshuffling—still boast huge TVL, with current restaking protocols totaling around $22.4 billion. EigenLayer alone holds over 63% market share. Platforms like Lido, Rocket Pool, and DeFi protocols such as Uniswap and Aave continue to draw in liquidity, moving ETH out of the “trading pool” and into the ecosystem’s closed loop. Meanwhile, Ethereum’s on-chain daily active addresses have grown 22% in the past 30 days, gas consumption is up 18% year-over-year, and this positive feedback between asset lock-up and ecosystem activity further reduces sell pressure.

Third, long-term holders are resolutely accumulating. Despite short-term volatility and occasional sell-offs from long-term holders, the overall trend shows investors are increasingly withdrawing assets from centralized exchanges to self-custody in decentralized wallets, minimizing platform risk and betting on long-term value. In the past seven weeks, ETH exchange balances have plunged 16.4%. This phenomenon of “off-exchange lock-up” validates the market’s confidence in Ethereum’s long-term potential and makes circulating supply even scarcer.

Demand Side: Wall Street Opens the Gates + Regulatory Clarity, Trillions Lined Up to Enter

If supply contraction adds “scarcity value,” then demand-side explosion is driven by “inflow of new capital.” Bank of America’s move is not isolated—it’s a microcosm of traditional financial giants collectively embracing crypto, signaling that compliant demand for Ethereum is now fully unleashed.

On one hand, top financial institutions are collectively relaxing allocation restrictions. Besides Bank of America, Morgan Stanley recommends a 2%-4% crypto allocation, Fidelity suggests 2%-5% (up to 7.5% for younger investors), and asset management giants like BlackRock and Vanguard are opening up crypto ETF trading. Wall Street’s stance has shifted from “cautious observation” to “active recommendation,” and the improvement of compliant investment tools has cleared the way for traditional capital. The launch of spot ETH ETFs offers a regulated yield exposure, attracting massive inflows from corporate treasuries and high-net-worth clients. Amundi’s tokenized funds further integrate traditional finance with the crypto ecosystem, potentially unlocking billions in incremental capital.

On the other hand, regulatory clarity has laid a solid compliance foundation. The U.S. SEC’s decision that ETH is not a security, and the implementation of frameworks like the GENIUS Act, provide regulatory assurance for Ethereum’s compliant development and lower the friction for institutional entry. Against this backdrop, Ethereum has become the core infrastructure for stablecoin issuance and real-world asset tokenization. Traditional companies like Siemens are moving device data onto Ethereum, expanding use cases and making more traditional capital appreciate Ethereum’s ecosystem value, accelerating capital inflows.

Crucially, ongoing technical upgrades continue to boost Ethereum’s core competitiveness, supporting the demand explosion. The Fusaka upgrade, launching by the end of 2025, will use PeerDAS technology to increase data throughput 8x, lower Layer 2 transaction fees, and support password login for mobile wallets—greatly improving scalability and user experience. Verkle Tree tech will enable ordinary smartphones to run validator nodes, further lowering participation barriers. Currently, Ethereum accounts for 60% of global DeFi TVL, over 90% of major NFT platform volume, and stablecoin issuance exceeds $134 billion. Its ecosystem moat is widening, reinforcing institutional and capital inflows.

Behind the Transformation: Ethereum’s Value Restructuring and Supercycle Outlook

The extreme supply contraction, combined with trillions in new demand, essentially marks Ethereum’s dual value transformation from “crypto asset” to “digital infrastructure + mainstream allocation asset.” The supercycle is ready to ignite, though potential risks remain.

Opportunities: In the short term (by end-2025), the market is still in a consolidation phase, with $3,000 as a strong support level, but the expected supply-demand imbalance will gradually materialize. As institutional capital continues to enter, the stage is set for stabilization and recovery. Medium term (2026-2028): Layer 2 ecosystem growth, higher staking ratios, and technological upgrades will continue to materialize, potentially driving ETH steadily higher to the $6,000 range. Long term (2029-2030): If asset tokenization, increased institutional allocations, and further regulatory clarity all materialize, ETH could challenge the $10,000 mark and narrow its market cap gap with Bitcoin, becoming the crypto market’s core leader.

Risks: Increased staking concentration may lead to centralization risks, with dominant validators potentially impacting network security. Slowing restaking growth and declining user activity could temporarily affect ecosystem liquidity. In addition, macroeconomic volatility, regulatory shifts, and crypto’s inherent high volatility could trigger periodic corrections—these must be managed rationally.

Regardless, ETH exchange balances hitting a decade low, combined with Wall Street giants opening compliant investment channels, clearly outlines Ethereum’s future trajectory: fewer circulating tokens, more capital entering; the script for a supply-demand imbalance is already written. Driven by both institutionalization and ecosystem expansion, Ethereum’s supercycle is poised for launch—the feast of value restructuring is just beginning.
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