Ethereum held on exchanges experienced a noticeable decline following a hacking incident at Binance on October 29. Though initial on-chain data suggested panic withdrawals, the movements may actually reflect a contraction in market liquidity.
Exchange Ethereum Holdings Decline in Two Phases
Between October 28 and November 2, the percentage of Ethereum held on exchanges dropped from 3.56% to 3.20% of total supply. This 0.36 percentage point decrease was significantly influenced by the announcement on October 29 of the Binance hack.
Analysis firm TRM Labs reported that hackers succeeded in extracting approximately 200,630 ETH from Binance’s hot wallet. TRM Labs specializes in tracking blockchain transactions and analyzing digital asset movements.
TRM Labs revealed that hackers pulled about 200,630 ETH from Binance’s hot wallet.
Interestingly, ETH balances on major exchange addresses did not immediately plummet on October 29; instead, they saw an increase of about 39,000 ETH. The substantial outflow occurred after withdrawals were re-enabled, with nearly 313,000 ETH leaving the addresses on November 1 and 2.
Weakening Liquidity Emerges as Key Trend
Large exchange addresses saw a reduction of approximately 297,000 ETH between October 28 and November 2, representing a 5.4% fall. The data suggests that the movement may not merely be a fleeting wave of fear but indicative of thinning market liquidity.
However, the decrease in exchange balances alone does not confirm that investors are accumulating holdings. These assets could have been moved to cold wallets, distributed across various addresses, or transferred to alternative platforms. The final destination of these funds remains uncertain based solely on exchange address data.
The reduction in exchange-held ETH points more to a shift in liquidity than a confirmed supply shock.
Ethereum Price Weakness Persists
Throughout this period, Ethereum’s market price has maintained a weak stance. ETH is trading around $2,264, below the late October peak of about $2,800. The breach of several moving averages suggests ongoing selling pressure.
The $2,300 to $2,400 range emerges as a significant threshold in the short term. A sustained move above this level could signal a recovery in market sentiment. Conversely, failure to hold the $2,200 zone may lead to intensified downward pressure.
Critical to understanding the current scenario is whether the withdrawn ETH has indeed exited trading circulation. As market flows stabilize, interpreting the exchange supply drop exclusively as a positive signal remains premature.
