When everyone is watching in fear, the whales have already voted with their actions. Data shows that an unprecedented liquidity tightening is quietly occurring in the cryptocurrency market.
Just this week, on-chain data shows that the ETH reserves of centralized exchanges have fallen to a historical low, accounting for only 8.7% of the total circulation. This means that out of every 100 ETH, less than 9 are left on exchanges for trading.
Meanwhile, Bank of America officially announced that starting January 2026, all wealth management clients will be allowed to allocate cryptocurrency ETPs through advisors, with a recommended allocation ratio of 1%-4%.
On one hand, supply is sharply contracting, while on the other hand, traditional funding channels have been completely opened. This level of supply-demand imbalance reminds me of the scenes before the previous bull markets started.
01 The Exchange Withdrawal Tide: Prelude to Supply-Demand Imbalance
Analyst Milk Road pointed out that the ETH holdings on exchanges have dropped to the lowest level since Ethereum was launched in 2015. Even more shocking is that since early July, the amount of ETH on exchanges has decreased by 43%.
This is not an ordinary market fluctuation — this is a structural change.
The whales are already in action. From December 5 to 15, a single whale withdrew a total of 21,850 ETH from exchanges, worth about $70.6 million. This large-scale withdrawal not only reduces circulating supply but also indicates that smart money is laying out for the future.
The sharp drop in ETH reserves on exchanges will coincide with the entry of traditional institutions, a coincidence that is rare in financial markets. Currently, the reserve of Ethereum on exchanges has fallen below 16.6 million, and this trend has obviously accelerated in the second half of 2025.
02 The Crypto Revolution on Wall Street: From Rejection to Embrace
The decision by Bank of America is milestone. Starting January 5 next year, the bank's investment strategy team will officially cover four Bitcoin ETF products: Bitwise, Fidelity, Grayscale, and iShares.
Chris Hyzy, Chief Investment Officer of Bank of America Private Bank, clearly stated: 'For investors passionate about thematic innovation and able to withstand high volatility, allocating 1%-4% of assets to digital assets is a suitable choice.'
This shift represents a fundamental change in Wall Street's attitude towards cryptocurrencies. These institutions are no longer experimenting; they are systematically laying out.
Morgan Stanley's Global Investment Committee has provided investors with a cryptocurrency allocation parameter of 2%-4%, while BlackRock and Fidelity have made similar suggestions. The gates of traditional finance have opened, and trillions of dollars are seeking entry.
03 The Truth Revealed by On-chain Data: Bottom or Starting Point?
When the market fear-greed index drops to 25 (extreme fear), on-chain data reveals different signals. Short-term holders have realized losses exceeding $4.5 billion in the past 30 days, a scale of capitulation that historically usually indicates a phase bottom.
The BTC reserves on exchanges are also not optimistic. In the past month, the total BTC reserves across all exchanges have decreased by about 120,000, falling below 2.6 million, the lowest level since 2018.
This phenomenon of 'supply shock' sharply contrasts with the potential demand from traditional funds in 2026.
Tom Lee from Fundstrat believes that the four-year cycle of Bitcoin may have been broken, and he predicts that Bitcoin will set a new historical high in early 2026. This view, while bold, aligns with current on-chain data.
04 New Logic of the Crypto Market: From Speculation to Practical Value
The core narrative for 2025 is 'tokenization.' Wall Street suddenly realizes that merely tokenizing the dollar can yield huge profits. Larry Fink, CEO of BlackRock, even called it 'the greatest and most exciting invention since self-referential accounting.'
Ethereum is at its own '1971 moment.' Back then, Wall Street created countless financial products to maintain the dollar's reserve status. Today, facing the wave of asset tokenization, Ethereum has become Wall Street's preferred platform.
The tokenization value of RWA (Real World Assets) has exceeded $6 billion, with almost all mainstream financial institutions building products on Ethereum. This trend is no longer limited to the native field of cryptocurrencies but is expanding to the entire financial industry.
05 Investment Strategy Response: Seeking Certainty in Uncertainty
In light of the current market, I recommend adopting a 'barbell strategy': allocate most assets to core assets like Bitcoin and Ethereum, while using a small portion of funds to lay out in high-potential areas.
Core positions (70-80%) should be concentrated in Bitcoin and Ethereum. Bitcoin is digital gold, while Ethereum is financial infrastructure; these two are the first stop for institutional funds to enter.
Opportunity positions (20-30%) can focus on Layer 2, DePIN, AI+Crypto and other tracks. Especially the Ethereum ecosystem, which recently completed the Fusaka upgrade, reducing transaction fees by 95% may bring about a new round of application explosion.
Most importantly: don't use leverage, don't go all in on one coin. The biggest risk in a bull market is not missing out but forgetting to exit at the peak. Develop a phased profit-taking plan and strictly execute it to maintain rationality amidst volatility.
Tom Lee predicts that by the end of 2026, Bitcoin could reach $300,000, and Ethereum may exceed $20,000. This prediction seems bold, but considering there are currently only 4.4 million Bitcoin wallets holding more than $10,000 globally, while there are nearly 900 million retirement accounts with over $10,000.
Even a small portion of traditional funds attempting to allocate is enough to trigger an unprecedented market reassessment.
Wall Street analysts have realized that the value that tokenization will unleash far exceeds people's imagination. It is not simply about asset fragmentation, but rather 'factorizing' the future value of businesses — everything from time, products, geography, to financial statements and even founder value can be tokenized.
While everyone is waiting for clear signals, smart money has quietly laid out. The market never lacks opportunities; it only lacks the eyes to discover them and the courage to act.
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