Exchange reserves near cycle lows but staking and L2 deposits at highs. $ETH isn’t pumping yet because liquidity’s being absorbed and that’s exactly what movements are built on. ● What’s Really Moving the Market Most people track price. But what really drives markets is liquidity; the amount of an asset that can actually be bought or sold without moving the price too much. When liquidity dries up, even small waves of demand can cause sharp price reactions. That is what is starting to happen in Ethereum. Exchange reserves have dropped to $60.8B, the lowest of 2025. Every time $ETH leaves an exchange, it leaves the “for sale” supply and usually ends up in long-term storage, staking, or l2 contracts. These are conviction driven positions, not speculative ones. In plain terms: less $ETH is available to sell. When demand returns, the market will move faster than expected. ● What Big Wallets Are Doing Right Now Over the past few weeks, large wallets; the kind that move markets, have been quietly absorbing $ETH from exchanges. No hype. No headlines. Just steady accumulation. This is what I call the absorption phase. Smart capital builds exposure while retail remains flat. It is slow, deliberate, and often ignored. The pattern mirrors what we saw in 2020. Back then, exchange balances fell months before prices reacted. Liquidity disappeared first, and volatility followed. ● What Futures and Leverage Are Saying Spot markets tell one story, derivatives tell another...and both are aligning. ➣ Open Interest: around $45B, recovering after recent liquidations. ➣ Funding rate: slightly positive at +0.008%, showing traders are cautiously turning long again. When open interest stabilizes and funding flips positive, the tone shifts from defense to quiet confidence. This is when leverage starts returning to the system. Liquidity is thinning while leverage builds. That is the recipe for a pressure zone. ● Why the Market Feels Boring and Why That’s Bullish Ethereum’s price has been stuck around $3,900, consolidating between $3,800 and $4,000 for weeks. Momentum looks dull; RSI near 42, On-Balance Volume flat. That calm is not a sign of weakness. It is compression. When volatility stays low while supply tightens, pressure builds beneath the surface. Each small buy begins to move price a little more than before. That is how reflexive assets behave before they expand. The quiet phase is the setup, not the end. ● How Every Real Rally Starts Here is the pattern that plays out every cycle: 1. Coins leave exchanges = supply tightens. 2. Liquidity thins = smaller buy pressure moves price faster. 3. Funding turns positive = leverage returns. 4. Narrative shifts = demand accelerates and feedback loops form. By the time the crowd notices, the structure is already changing. Price only reflects the second half of the move. ● Why This Cycle Has More Conviction The 2020 reflexivity was speculative. This one is structural. ➣ Layer-2 (@arbitrum & @base + others) settlement volumes are at record highs. ➣ Restaking yields on @eigenlayer, @puffer_finance and other restaking protocols makes $ETH productive collateral. ➣ On-chain liquidity depth is stronger than in 2021, even with lower prices. Ethereum is now the settlement layer for a modular financial system. When $ETH tightens, that pressure ripples across L2s, restaking protocols, and DeFi infrastructure. Liquidity in $ETH defines liquidity for everything built on top of it. ● My Take Markets do not move when everyone agrees. They move when structure shifts quietly before sentiment catches up. Right now, the structure is shifting. Exchange supply is falling. Whales are accumulating. Leverage is rebuilding. Volatility is sleeping. If you only look at charts, it seems like nothing is happening. But if you watch liquidity, you can see it clear as day. The silent squeeze has already begun. The market just has not priced it yet.