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- This trend is viewed as bullish, indicating high demand and low supply.
- The current exchange ETH balance of 17.8 million is the highest level seen since July 2016.
Ether reserves held on cryptocurrency exchanges have dropped to a five-year low. According to data from Glassnode, the current balance of 17.8 million ETH represents the highest level recorded since July 2016.
The number of Ethereum tokens available on trading platforms began to decline in September 2022. Subsequent events, notably the insolvency of FTX two months later, eroded investor confidence in centralized custodians, further accelerating the decrease.
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Price Surge Expected
The current exchange balance accounts for less than 15% of the total Ether supply on the Ethereum network. During the 2021 bull market, the exchange balance reportedly stood at 26%. This reduction is considered bullish as it signals strong demand and limited supply, with less ETH available on centralized exchanges (CEXs) for immediate trading.
However, this month has seen a simultaneous rise in staking activity alongside falling exchange balances. Since the beginning of May, the total amount of staked ETH has increased from 19.3 million (the level prior to the Shapella upgrade) to over 21.3 million.
After a three-year period, validators gained the ability to withdraw their staked Ether from the Beacon Chain following an update implemented on April 12. The fact that an increase in validators re-staking their ETH has led to a decrease in circulating supply is viewed as positive for the asset’s price.
Earlier this month, it was revealed that in the week following the Shapella upgrade, the volume of staked Ether exceeded the volume of ETH being withdrawn. Institutional staking service providers and investors reinvesting their gains after withdrawal appear to be the primary drivers of this trend.
