Ethereums Exchange Holdings Hit 5-Year Low, Shocking Investors

Ethereums Exchange Holdings Hit 5-Year Low, Shocking Investors


Ethereum’s balance on exchanges has hit a five-year low, with only 86% of the total ETH supply present on centralized exchanges, leading to speculation about the future price action of the world’s second-largest cryptocurrency.

Ethereum (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 this coming week is no exception. 

The show’s star is ether, the world’s second- largest digital currency, quietly making headlines owing to an intriguing phenomenon – its balance on exchanges is nearing an all-time low. 

The question on everyone’s mind is: what could this mean for future of the ETH?

Data from Glassnode paints a compelling picture. As of May 26, out of the total Ethereum (ETH) supply of 120.26 Million, a mere 16.64 Million is present on centralized exchanges, suggesting that 86 percent of the Ethereum (ETH) supply is lying dormant.

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This marks a drastic decrease from 2021’s bull market, during which the exchange balance was around 25-26%. This tendency appears to suggest a positive  tendency sentiment, as a limited supply drives prices upwards.

Staking craze: the power of passive income

1 of the whole lot of contributors to this phenomenon is the growing popularity of ether staking. Millions of additional coins have been staked thanks to the past few Shapella upgrade to the Ethereum (ETH) network. 

This move has resulted in a whole lot of chunk of the ether supply being absorbed from the market, creating a supply crunch. This increasing interest in staking is primarily owing to large ether holders’ preference for generating passive income rather than liquidating their assets. 

Ethereum’s recent upgrades fuel the exodus

Another critical factor is Ethereum’s recent upgrades. After the  introduction of the Merge upgrade, which transitioned Ethereum (ETH) to a proof-of-stake (PoS) consensus mechanism in September 2022, the price of decline in Ethereum (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 Ethereum (ETH) worth $34 Billion is as of now staked on numerous platforms.

Impact on Ethereum (ETH) rate: will it soar or plunge?

Historically, low exchange reserves suggest less selling pressure and a positive  tendency momentum, potentially driving Ethereum (ETH) prices higher. The past few statistics support this speculation; the Ethereum (ETH) price has increased by 2 percent in the past 24 hours, trading over the $1800 level.

Ethereum's exchange holdings plunge to 5-year low - 2
Ethereum (ETH) 24-hour price chart | Source: CoinMarketCap

Furthermore, ether’s decreased volatility and declining trading volumes since the upgrade have brought stability to Ethereum (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 positive  tendency run or introduces an unexpected twist. As always, stay tuned for more exciting developments.

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