Bitcoin Cash Leads L1 Performance as Ethereum Exchange Reserves Hit Historic Lows

Bitcoin Cash Outperforms Major Layer-1 Networks

Bitcoin Cash has claimed the title of best-performing Layer-1 blockchain asset in 2025, climbing nearly 40% year-to-date and significantly outpacing its competitors ^[1]. The performance stands in stark contrast to most major blockchain networks, with Ethereum, Solana, Avalanche, Cardano, and Polkadot all remaining deep in negative territory, several down more than 50% ^[1].

According to data shared by analyst Crypto Koryo, Bitcoin Cash has surpassed modest gains from BNB, Hyperliquid (HYPE), Tron, and XRP ^[1]. Notably, the strong performance comes despite the project lacking an official X (formerly Twitter) account ^[1].

Favorable Supply Dynamics Drive BCH Performance

The outperformance has been attributed to a combination of favorable supply dynamics and new demand catalysts ^[1]. Unlike many competing blockchain networks, Bitcoin Cash has no token unlocks, no foundation treasury, and no venture capital overhang, significantly reducing sell-side pressure ^[1].

"The entire supply is circulating. No unlocks. No foundation, [no] VCs dumping," Koryo wrote ^[1]. This supply structure contrasts sharply with many newer Layer-1 networks that face ongoing token unlock schedules and institutional selling pressure.

Ethereum Faces Historic Supply Squeeze

While Bitcoin Cash benefits from stable supply dynamics, Ethereum is experiencing what analysts are calling the tightest supply situation in the network's history ^[2]. On-chain data from Glassnode shows that ETH holdings on centralized cryptocurrency exchanges have fallen to a historic low of approximately 8.7% of total supply—the lowest level since Ethereum's launch in 2015 ^[2].

Since early July, exchange reserves have declined by approximately 43% ^[2]. This compares to roughly 14.7% of Bitcoin's supply still residing on exchanges ^[2].

ETH Migration to Non-Selling Venues

Analysts note that Ethereum is increasingly being moved to areas where immediate selling pressure is typically absent ^[2]. These include staking and restaking protocols, Layer-2 network activities, use as collateral in decentralized finance (DeFi), accumulation by Digital Asset Treasuries (DATs), and long-term custody with institutional providers ^[2].

This migration reduces freely available supply in markets and increases the probability of a supply squeeze scenario ^[2]. The trend suggests growing confidence in holding ETH for yield generation and utility rather than speculative trading.

Market Performance and Technical Outlook

Ethereum has maintained support above the $3,000 level but has repeatedly failed to break through resistance around $3,200 ^[2]. However, the ETH/BTC trading pair recently broke through a multi-month downtrend line, indicating relative strength for Ethereum compared to Bitcoin ^[2].

Meanwhile, Bitcoin itself may face near-term volatility. Trader Michaël van de Poppe outlined a scenario in which BTC could dip to around $87,000 ahead of next week's Federal Reserve meeting before potentially rebounding toward $100,000 within one to two weeks ^[1]. He cited reduced quantitative tightening, upcoming rate cuts, and an expanding money supply as supportive macro factors ^[1].

Van de Poppe identified $86,000 as a critical support level, with a break below potentially triggering a move to $80,000, while failure to break and hold above $92,000 would invalidate the bullish scenario ^[1].

The contrasting supply dynamics between Bitcoin Cash's clean supply structure and Ethereum's tightening available supply highlight how tokenomics continue to play a crucial role in Layer-1 network performance during varying market conditions.