Ethereum Supply Tightens as 45 % of ETH Becomes Illiquid, Sygnet Reports
January 30 2026 – A new analysis from Swiss‑based digital‑asset bank Sygnum shows that nearly half of all Ether is now locked in staking contracts, exchange‑traded funds and corporate treasuries, reducing the amount available for active trading. The tightening supply could amplify price movements if buying pressure picks up, but the cryptocurrency remains under pressure.
Key findings from Sygnum’s Q1 2026 Investment Outlook
| Metric | Figure (Q1 2026) | Trend |
|---|---|---|
| ETH locked or hard to sell | ≈ 45 % of total supply | Rising |
| ETH on exchanges | –14.5 % YoY | Continued decline |
| ETF holdings | ≈ 10 % of circulating ETH | Growing, 4 M ETH as of Jan 2026 |
| Corporate holdings | 6.1 M ETH (~5 % of supply) | Slight dip toward year‑end |
| Price | $2,736 (‑8 % week‑over‑week) | Down ~40 % from Oct 2025 peak |
The report attributes the shrinkage of liquid Ether to three primary channels:
-
Exchange‑traded funds (ETFs) – Although inflows turned negative in late 2025 as risk‑averse investors pulled back, net inflows for the full year still amounted to roughly 3.4 million ETH, valued at about $11.3 billion. On‑chain ETF balances continued to climb through the quarter, reaching around 4 million ETH by January.
-
Staking participation – More validators entered the network than exited during the quarter, pushing the amount of Ether locked in staking contracts to new highs. Large deposits from the crypto firm BitMine were singled out as a major contributor to this increase.
- Corporate treasuries – Public companies collectively own just over 6 million ETH, roughly five percent of the circulating supply. However, the report notes that corporate demand waned toward the end of the year as many firms’ share prices fell below the value of their Ether holdings.
Market context
Ether’s price has been on a downward trajectory since the sharp sell‑off that followed the October 2025 market correction. Even with the “Fusaka” upgrade and a refreshed development roadmap providing technical tailwinds, the token remains 40 % below its short‑lived all‑time high. Sygnum warns that a tighter supply alone will not guarantee price appreciation; any significant upside will require a corresponding rise in demand.
Network activity remains robust
Despite the liquidity squeeze, on‑chain activity has surged:
- Transactions processed – Over 145 million during Q1, a record‑setting figure.
- Smart‑contract deployments – 8.7 million new contracts were launched.
- Stablecoin transfers – $8 trillion moved on Ethereum, the highest quarterly total ever recorded.
These metrics suggest that while the tradable pool of ETH is shrinking, the protocol continues to be a central hub for decentralized finance, tokenisation and stablecoin usage.
Analyst takeaways
- Supply contraction could heighten volatility – With 45 % of Ether locked, even modest shifts in demand may produce outsized price moves.
- ETF inflows remain a key liquidity driver – Continued growth of on‑chain ETF holdings points to institutional interest, despite recent outflows in Q4 2025.
- Staking continues to lock capital – The net increase in staked Ether underscores confidence in Ethereum’s proof‑of‑stake security model but also removes supply from the market.
- Corporate appetite is softening – As equity valuations of ETH‑holding firms decline, corporate treasuries may start divesting, potentially releasing some locked supply back into the market.
- Underlying network health is strong – Record transaction volumes and stablecoin flows indicate that usage demand for the Ethereum ecosystem remains robust, which could eventually translate into renewed buying pressure for ETH.
The Sygnum report highlights the dual nature of Ethereum’s current environment: a tightening supply side that could amplify price swings, set against a backdrop of strong on‑chain activity that keeps the network’s utility high. Market participants will be watching closely to see whether demand can catch up with the reduced liquid supply.
Source: https://thedefiant.io/news/research-and-opinion/ethereum-supply-tightens-with-45-of-eth-locked-sygnum
