Ethereum Balance On Exchanges Falls to New Lows

Written By Guest User

Full article by Yashu Gola found here.

Key Points

  • The total amount of Ether ($ETH) stored on cryptocurrency exchanges fell to new extreme lows at the same time its price rose back above $3,000 per coin today.

  • An analysis from CryptoQuant indicates exchange Ethereum reserves dropped to 18.533 million ETH, a significant drop from 23.92 million ETH a year ago. This shows an inverse correlation between ETH reserves on exchanges with the price of ETH, which rose from about $350 to $3,100.

Screenshot 2021-09-23 at 14-57-30 Ethereum balance on crypto exchanges hits new lows as ETH price retakes $3K .png

  • Decreasing exchange reserves indicate that market sentiment is overall focusing on holding/storing for the long term rather than trading in ETH for digital/fiat assets.

  • If demand for ETH remains the same or rises, the dwindling supply can cause the remaining coins to be valuated higher.

  • Additional causation to the greater macro supply changes include the EIP-1559 protocol which introduced a burn mechanism that regularly takes coins out of circulation forever, and the upcoming ETH 2.0 upgrade which introduces passive staking to to holders.

  • The amount of staked ETH also continues to grow, as it increased from 11,616 ETH in November 2020 to 7.75 million ETH on September 23rd, 2021.

Screenshot 2021-09-23 at 15-05-29 Ethereum balance on crypto exchanges hits new lows as ETH price retakes $3K .png
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