Ethereumย (ETH) balances on cryptocurrency exchanges have plunged to a five-year low, triggering speculation on its future price action.
Intriguing developments have always marked the ebb and flow of the cryptocurrency market, and thisย comingย week is no exception.ย
The showโs star is ether, the worldโs second- largest digitalย currency, quietly making headlines owingย to an intriguing phenomenon โ its balance on exchanges is nearing an all-time low.ย
The question on everyoneโs mind is: what could this mean for futureย ofย the ETH?
Data from Glassnode paints a compelling picture. As of May 26, out of the total Ethereumย (ETH) supply of 120.26 Million, a mere 16.64 Million is present on centralized exchanges, suggesting that 86 percent of the Ethereumย (ETH) supply is lying dormant.
This marks a drastic decrease from 2021โs bull market, during which the exchange balance was around 25-26%. This tendency appearsย to suggest a positiveย tendency sentiment, as a limited supply drives prices upwards.
Staking craze: the power of passive income
1 of the wholeย lotย of contributors to this phenomenon is the growing popularity of ether staking. Millions of additional coins have been staked thanks to theย pastย few Shapella upgrade to the Ethereumย (ETH) network.ย
This move has resulted in a wholeย lotย of chunk of the ether supply being absorbed from the market, creating a supply crunch. This increasing interest in staking is primarily owingย to large ether holdersโ preference for generating passive income rather than liquidating their assets.ย
Ethereumโs recent upgrades fuel the exodus
Another critical factor is Ethereumโs recent upgrades. Afterย theย introduction of the Merge upgrade, which transitioned Ethereumย (ETH) to a proof-of-stake (PoS) consensus mechanism in September 2022, the price of decline in Ethereumย (ETH) exchange reserves has accelerated.
Further fuelling the exodus is the Shanghai upgrade implemented on April 12, which has increased ethereum staking even more. Staking bonus data outlines that approximately 18.91 Million Ethereumย (ETH) worth $34 Billion is asย ofย now staked on numerous platforms.
Impact on Ethereumย (ETH) rate: will it soar or plunge?
Historically, low exchange reserves suggest less selling pressure and a positiveย tendency momentum, potentially driving Ethereumย (ETH) prices higher. Theย pastย few statistics support this speculation; the Ethereumย (ETH) price has increased by 2 percent in the past 24 hours, trading over the $1800 level.
Furthermore, etherโs decreased volatility and declining trading volumes since the upgrade have brought stability to Ethereumย (ETH) prices. Nonetheless, the question remains, will this stability persist, or are we on the brink of a price explosion?
Only time will tell whether this all-time low balance on exchanges leads to a positiveย tendency run or introduces an unexpected twist. As always, stay tuned for more exciting developments.
