Binance’s Exchange Reserve for ETH is declining meaning coins are being withdrawn from the exchange. Under normal conditions a shrinking exchange supply is considered a positive signal for price. However, price is also falling right now. This suggests that a stronger negative factor is dominating the market. Those factors may include:
1-Derivatives pressure outweighs spot dynamics. Exchange Reserve reflects spot supply but short term price action is mostly driven by the futures market. If open interest is high funding has turned negative and the short side is aggressive derivatives selling can push price lower even if spot supply is shrinking. In other words withdrawals in spot may be overshadowed by stronger short pressure in futures.
2-Withdrawn ETH may not be for holding. Exchange outflows do not always mean long term accumulation. ETH can be withdrawn to be used as DeFi collateral for OTC transactions moved to L2 or staking platforms or transferred to other exchanges. Binance reserves may be declining while global sell pressure still persists.
3-Weak demand side. A supply decrease alone is not enough. If there are no strong new buyers stablecoin inflows are weak or overall risk appetite is low price may not react positively.
4-Macro and market correlation. ETH does not move in isolation. If BTC is weak the DXY is strong or broader risk markets are under pressure positive reserve signals can be overridden by macro driven downside.
5-Whales loading into derivatives. At times large players withdraw spot ETH while simultaneously opening short positions in derivatives.
Currently, reserves are trending downward again, moving averages look weak after a bearish crossover and price sits around $2.9K with fading momentum. If derivatives pressure continues declining reserves may not immediately trigger a rebound. Instead, price could first clear liquidity and retest lower support levels potentially pointing toward the $1,700 region.
Written by PelinayPA
