Ethereum supply dries up on wintermute’s OTC desk, founder reveals

In a viral tweet on X, the founder of Wintermute revealed that their Over-The-Counter (OTC) desk has nearly no Ethereum (ETH) left for sale. Wintermute is one of the world’s largest digital asset market makers, and the announcement sparked immediate excitement across the crypto community. This unexpected supply crunch is raising eyebrows across the space and could be a signal that a major shift in ETH market dynamics is underway.

Unlike public exchanges, OTC desks are used for large, private transactions often serving institutional investors, hedge funds, and high-net-worth individuals. A liquidity shortage on such a platform typically indicates strong accumulation by large buyers and a limited willingness to sell among major ETH holders.

What’s causing the Ethereum shortage?

Several powerful forces appear to be driving the ETH supply squeeze. First, institutional accumulation is ramping up as buyers prepare potential approval of spot ETH ETFs in the U.S. Other key market catalysts include upcoming Ethereum upgrades, and broader optimism in digital assets. These buyers are securing positions early, thus reducing the available supply.

At the same time, long-term Ethereum holders and large investors often referred to as whales are showing little interest in selling their ETH. This behavior reflects their strong confidence in Ethereum’s future price growth, as they prefer to hold their assets rather than take short-term profits.

Meanwhile, a significant amount of ETH is currently locked away in systems that support the Ethereum network. For example, many holders have committed their ETH to staking, which means they’ve deposited it to help secure the blockchain and earn rewards over time. Others have their ETH tied up in decentralized finance applications, where it is used for lending, borrowing, or earning interest.

Additionally, ETH is being used on Layer 2 networks that make Ethereum faster and cheaper to use, but often require temporarily locking tokens. Because so much ETH is tied up in these activities, it is effectively removed from the market and unavailable for trading. This further limits the supply of ETH that can be bought and sold, contributing to the overall shortage.

Adding fuel to the fire, the market is heating up with speculation and regulatory optimism, prompting a wave of FOMO-driven buying behavior. As a result, Wintermute and other OTC desks are finding it increasingly difficult to source ETH, a development that could mark the beginning of a broader Ethereum supply shock.