Ethereum (ETH) is witnessing a significant shift in market dynamics, with exchange-based holdings plummeting to a two-year low while miner revenues surge to a one-month peak. This dual trend highlights growing investor confidence, increased network activity, and a maturing ecosystem anchored in decentralized finance (DeFi) and non-fungible tokens (NFTs).
Declining Exchange Balances Signal Strong Holder Confidence
Recent on-chain data reveals that the total amount of ETH stored on cryptocurrency exchanges has dropped to its lowest level in 24 months. According to insights from Documenting Ethereum, this marks a pivotal moment in Ethereum’s market behavior.
“ETH balance in exchanges at a 2-year low.”
This decline reflects a broader trend of users moving their assets off centralized platforms and into personal wallets or cold storage solutions. Such behavior typically indicates long-term holding sentiment—investors are less inclined to sell and more focused on securing their assets for future value appreciation.
A shrinking exchange supply also reduces immediate selling pressure, which can contribute to price stability or upward momentum over time. When fewer coins are readily available for trading, market dynamics often favor scarcity-driven price increases—especially during periods of high demand.
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The Role of DeFi and NFTs in Withdrawing ETH from Exchanges
One of the primary drivers behind this exodus is the explosive growth of decentralized applications built on Ethereum, particularly in DeFi and NFTs.
In DeFi, users lock up ETH as collateral for loans, liquidity provision, or yield farming. Protocols like Aave, Uniswap, and Curve rely heavily on staked or deposited ETH, effectively removing large volumes from circulation. As of mid-2025, over $30 billion in value remains locked across major Ethereum-based DeFi platforms—an all-time high that underscores robust ecosystem engagement.
Meanwhile, the NFT market continues to absorb ETH at scale. Unique digital assets require full token purchases (unlike fungible cryptocurrencies such as Bitcoin, which can be bought in fractions), meaning each transaction involves a complete ETH transfer—often at premium prices.
Notable developments include:
- Coca-Cola launching its first NFT collectibles to celebrate International Friendship Day.
- The Stoner Cats animated series crowding the Ethereum network, pushing hourly transaction fees to an astonishing $2.53 million at peak congestion.
These events not only showcase mainstream adoption but also emphasize Ethereum’s role as the leading blockchain for NFT innovation.
Why NFTs Are Fueling Network Activity
NFTs differ fundamentally from traditional cryptocurrencies due to their non-fungibility—each token represents a unique asset that cannot be directly exchanged on a one-to-one basis. This uniqueness makes them ideal for digital art, collectibles, virtual real estate, and identity verification.
Because NFTs are indivisible and must be purchased entirely, they demand whole units of ETH for transactions. This increases both the velocity and volume of ETH moving through the network. High-profile drops and limited-edition releases often trigger bidding wars, further spiking gas fees and miner rewards.
As more enterprises and creators adopt Ethereum for tokenizing assets, the network’s utility expands beyond speculative trading into tangible use cases—solidifying its long-term relevance.
Miner Revenue Hits Monthly Peak Amid Rising Network Demand
Concurrent with the drop in exchange balances, Ethereum miner revenue has climbed to a one-month high, with transaction fees accounting for 30.22% of total earnings over a 7-day moving average, according to Glassnode.
“Ethereum percent miner revenue from fees (7d MA) just reached a 1-month high of 30.220%.”
This spike correlates directly with increased network utilization. Open interest in Ethereum perpetual swaps recently surpassed $8 billion for the first time since May—a clear indicator of strong derivatives market participation and trader confidence.
Higher open interest means more positions are open in futures markets, leading to more frequent funding payments and on-chain settlements. These activities generate continuous transaction flow, directly boosting miner income through gas fees.
Even after the transition toward proof-of-stake via upgrades like EIP-1559, fee-driven revenue remains a critical metric for assessing network health and user engagement.
Ethereum’s Path Toward Deflationary Status
A landmark event occurred on August 5: the mining of Ethereum’s first deflationary block following the activation of the London Hard Fork (EIP-1559). Since then, a portion of transaction fees has been permanently burned rather than distributed to miners.
This mechanism introduces artificial scarcity by reducing the circulating supply with every transaction. During periods of high network usage, more ETH is burned than issued—creating net deflation.
Over time, this could transform Ethereum into a scarce digital asset, similar in economic design to Bitcoin but with added utility through smart contracts and dApps. Analysts suggest that if burn rates continue to outpace issuance, ETH may evolve into a deflationary currency—a powerful narrative for long-term investors.
👉 Learn how Ethereum’s burning mechanism impacts supply and price trends.
Frequently Asked Questions (FAQ)
Why is low ETH balance on exchanges bullish for price?
Low exchange reserves suggest fewer coins are available for immediate sale, reducing selling pressure. When demand remains steady or increases while supply tightens, prices tend to rise due to scarcity.
How do NFT sales affect Ethereum’s network performance?
Major NFT mints generate thousands of simultaneous transactions, increasing congestion and gas fees. While this can slow down processing times, it also signals strong user engagement and generates substantial revenue for miners.
What does ‘miner revenue from fees’ indicate about Ethereum?
High fee-based revenue reflects intense network activity. It shows that users are actively interacting with dApps, trading derivatives, or minting assets—all positive signs for ecosystem vitality.
Is Ethereum becoming deflationary?
Yes, since EIP-1559’s implementation, Ethereum has experienced periods of deflation where more ETH is burned in fees than created through block rewards. Sustained high usage could make this trend permanent.
Can I buy part of an NFT like I do with Bitcoin?
No. NFTs are non-fungible and indivisible by design. You must purchase the entire token. However, some platforms offer fractionalized NFTs through wrapper contracts, though this is still an emerging concept.
What role does DeFi play in locking up ETH?
DeFi protocols require users to deposit ETH as collateral or liquidity. This locks the asset in smart contracts, taking it out of circulation and reinforcing scarcity on public markets.
The convergence of declining exchange supplies, rising miner revenues, and expanding real-world use cases paints a compelling picture for Ethereum’s future. As more users choose to hold, stake, or utilize ETH rather than trade it freely, the network evolves from a speculative asset into a foundational layer for decentralized innovation.
With institutional interest growing and technological upgrades enhancing efficiency and sustainability, Ethereum remains at the forefront of blockchain evolution.
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