[Digital Today reporter Yoonseo Lee (이윤서)] Ethereum liquidity on Binance has fallen to its lowest level in about seven months.

U.Today reported on Oct. 12 that CryptoQuant data showed Ethereum's Binance liquidity shock Z-score fell to about -1.00.

The reading is seen as a particularly steep decline even amid volatility so far in 2026. The indicator at one point earlier this year posted higher positive readings. It then plunged in February and has since fluctuated. It gradually recovered over the summer, but turned down again in October to the current level.

Ethereum liquidity activity on Binance is now below typical levels compared with the historical average. Markets are watching whether the change is a sign that supply-demand conditions on the exchange have weakened, rather than merely reflecting price swings.

A decline in Ethereum supply on exchanges was also cited as a factor. The drop in the indicator has come alongside a reduction in exchange-held balances and is tied to a trend of investors moving holdings from exchanges to personal wallets.

Still, a fall in liquidity indicators does not immediately mean investors are leaving or engaging in large-scale selling. Markets say it is less an indicator that directly shows which way prices will move, and more a sign that trading conditions are changing.

If buy and sell orders in the order book also decline, prices could move sharply even on relatively small orders. It is difficult to conclude from this indicator alone how thin the order book has become. Trading volume and the price gap between bids and offers must also be checked to judge more specifically how liquidity changes affect trading.

Markets are focused on exchange liquidity and changes in the supply structure, rather than on the immediate price direction. Binance is a major exchange where Ethereum trading is concentrated, so weaker liquidity there could be a reference indicator for gauging whether volatility will expand. As a result, the Ethereum market needs to watch whether the decline in exchange-held balances continues and whether the current low-liquidity state is a temporary adjustment or a shift in trend.