Ethereum Struggles as Demand Fails to Match Falling Exchange Supply
On-chain and market data show shrinking exchange reserves alongside weakening price action and shifting derivatives positioning, highlighting a divergence between available spot supply and market demand.
Exchange-held ETH balances have declined to multi-year lows, a development that is normally seen as constructive because it reduces immediate sellable supply, but price has not responded with strength, underscoring weak market demand [1][4][5].
Derivatives metrics point to a structural shift in sentiment: aggregate funding rates that were elevated across major venues in October 2024 have cooled, and recent reports note a funding-rate flip that signals differing positioning in perp markets versus earlier risk-on periods [2][4].
Capital flows into crypto products are also tilting negative for ETH, with reported ETF redemptions including roughly $130.1 million pulled from Ethereum funds, reflecting outflows even as on-chain supply tightens [3][5].
Taken together, on-chain exchange reserves, derivatives funding shifts and ETF redemptions indicate a disconnect: available spot supply is lower, but demand measures and price action remain subdued, suggesting the market is not currently absorbing the tighter supply backdrop [1][2][3][4][5].
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Citations
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- 1Ethereum Struggles as Demand Fails to Match Falling Exchange SupplyETHNews• Feb 20, 2026
- 2Ethereum Funding Rate Flip Signals Structural Shift in Market SentimentETHNews• Feb 20, 2026
- 3Crypto ETF Redemptions Deepen With $165 Million Pulled From Bitcoin FundsCoindoo• Feb 20, 2026
- 4All about Ethereum’s derivatives reset as exchange reserves hit multi-year lowsAMBCrypto• Feb 20, 2026
- 5Ethereum Supply Drops to 2017 Lows – Key Metrics Signal Demand SqueezeCryptonewsland - Your Daily Crypto News• Feb 20, 2026
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