Ethereum’s Shrinking Liquid Supply Could Support Rally as Over 40% of ETH Is Illiquid

• More than 40% of Ethereum’s supply is sidelined

• Staking, institutional ETFs and DA(T)s together remove significant sell-side liquidity.

• On-chain trackers show staking (~29.5%), ETFs (~7.3%), and DATs (~3.4%) as key contributors to the shortage.

Ethereum supply is shrinking fast—learn how staking, ETFs, and treasuries lock liquidity and what it means for price action. Read COINOTAG’s analysis.

How is Ethereum supply shrinking?

Ethereum supply is shrinking because a growing share of ETH is locked in staking, exchange-traded funds, and decentralized autonomous treasuries, removing tokens from active circulation. These locked pools compress the liquid float, which can amplify price moves when demand increases.

How much ETH is locked in staking, ETFs, and decentralized treasuries?

On-chain observers report that roughly 29.5% of ETH is staked in the proof-of-stake validator set, where withdrawal mechanics and exit-rate limits slow re-circulation. Another ~7.3% is held by spot and institutional ETFs and is inactive a large portion of the time, while decentralized autonomous treasuries (DATs) and dormant addresses account for about 3.4%. These figures combine to sidelining in excess of two-fifths of the total supply, according to community data shared by Taylor.eth and further compiled by market trackers referenced in this report (Taylor.eth; Ark Investments; Arkham Intelligence; CryptoQuant).

Frequently Asked Questions

How does the staking exit rate limit affect ETH liquidity long-term?

The staking exit rate limit lengthens the time it takes for validators to withdraw, effectively locking ETH for roughly the exit window (around 40 days) and often longer in practice. This restriction reduces immediate sell-side pressure and can contribute to sustained upward price impetus if inflows continue.

Is the supply vacuum likely to trigger a new Ethereum all-time high soon?

Short-term price moves depend on demand persistence and macro conditions. With major pools off-exchange and institutional holdings rising, reduced liquidity raises the probability of sharp upward moves; however, timing remains uncertain and contingent on continued inflows and market sentiment.

Key Takeaways

• Supply compression is real: Staking, ETFs and DATs have sidelined over 40% of ETH, shrinking the liquid float.
• Institutional accumulation matters: Ark Investments data and on-chain trackers show large ETF and corporate holdings reducing exchange reserves.
• Market impact: Reduced tradable supply can magnify price moves; monitor exchange reserves, staking flows, and ETF disclosures for signals.

Conclusion

COINOTAG analysis shows Ethereum supply is materially tighter than in prior cycles, with significant portions locked by staking, ETFs, and decentralized treasuries. Authoritative on-chain data (Taylor.eth; Ark Investments; Arkham Intelligence; CryptoQuant) indicate a shrinking liquid float, which increases sensitivity to demand shocks. Monitor exchange reserves and staking exits for the next directional clues; COINOTAG will continue to report updates (Published: October 15, 2025 — Updated: October 15, 2025).

ETH’s circulating supply is shrinking super fast

3.4% held by DATs (illiquid for years or forever)
7.3% held by ETFs (illiquid 80% of time)
29.5% (majority illiquid due to exit rate limit)

ETH hasn’t undergone a cycle where these three supply vacuums existed. DATs are new, Spot… pic.twitter.com/yl9fDEnOuB

— Taylor.eth (@Taylorlikeseth) October 14, 2025

Sources: Taylor.eth (community metrics); Ark Investments (ETF accumulation data); Arkham Intelligence (on-chain holdings data); CryptoQuant (exchange reserve ratios); comments from market participants Crypto Gucci and Ted Pillows as recorded on public social channels.

Author/Organization: COINOTAG

Published: October 15, 2025 • Updated: October 15, 2025