As panic exits the market, strategic accumulation appears to be taking its place.
Whale activity began with large Ethereum [ETH] withdrawals from OKX hot wallets, where multiple tranches moved within hours. Soon after, similar outflows emerged from Binance, reinforcing a coordinated off-exchange migration.
Source: Arkham
This sequence may be evidence of deliberate accumulation, rather than routine transfers. Whales likely capitalized on ETH’s dip near $2,050, absorbing the supply while sentiment weakened.
As funds exited exchanges, the liquid sell-side inventory declined, easing the selling pressure that recently weighed on the price action. Such reserve compression often precedes volatility expansion and, at times, price rallies.
Source: Arkham
Moreover, amid post-ETF institutional adoption in 2026, these withdrawals may also anticipate deeper DeFi deployment and staking participation, tightening circulating supply further.
Exchange reserves slide to multi-year lows
ETH Exchange Reserves expanded rapidly between 2016 and 2017, rising from roughly 5–10 million ETH as early adoption accelerated. Momentum persisted into 2020–2021, when reserves peaked near 35 million ETH during the DeFi and NFT expansion phase.
Source: CryptoQuant
However, a structural drawdown soon emerged, one which gradually intensified through 2024–2025 as staking and off-exchange custody gained dominance. In fact, in early February 2026, reserves hit 16.3 million ETH – Marking multi-year lows last seen in 2016.
For its part, ETH was valued at close to $2,000 within this compression zone, reflecting recent volatility. As staking absorbs supply and institutional vehicles remove liquidity, tradable inventory tightens.
These supply contractions reduce immediate sell pressure and, when sustained, have historically preceded stronger price recoveries once demand conditions improve.
Derivatives markets reflect risk reduction, not expansion
Finally, Ethereum’s derivatives structure weakened as the February 2026 sell-off unfolded. Open Interest trended lower, falling into approximately the $24 billion–$36 billion range after sharper peaks earlier in the cycle.
Source: CoinGlass
Multi-day contractions followed, reflecting active deleveraging rather than fresh positioning. As leverage flushed, long liquidations accelerated, with over $1 billion in long exposure erased during the crash phase.
Source: CoinGlass
Funding rates then flipped negative and remained suppressed, hovering near –0.003% to deeper prints in capitulation windows. This indicated that bearish positioning was dominant while long positions paid to maintain exposure.
Meanwhile, liquidation maps underlined long wipes outweighing short closures.
Source: CoinGlass
Together, derivative contraction aligned with falling exchange reserves, reinforcing real spot tightening while also sustaining medium-term squeeze potential. This, despite near-term volatility risk.
Source: https://ambcrypto.com/assessing-ethereums-liquidity-landscape-shift-as-reserves-hit-multi-year-lows/
