The amount of ether (ETH), the cryptocurrency of the Ethereum network, deposited in cryptocurrency exchange accounts is shrinking. This Tuesday, April 19, only 17.2% of the total circulating ETH was on these platforms, a percentage that had not been reached since July 2016.
These stats can be corroborated on the blockchain data analytics platform. glass node. Taking into account that the current circulation of ether is 120,453,947 units, according to data from CoinMarketCapthen it can be concluded that there are 20,718,078 ETH in exchanges.
In July 2016, with ETH priced at just $11.32—a far cry from $3,105 at press time—Ether’s share of exchanges was even lower. At that time, more precisely on July 17 of that year, 11.7% of the circulation of the cryptocurrency in exchanges was reached.
Of course there are several factors that can explain this situation. First of all, the total amount of ETH that existed at that time was much less than it is today. According to glass node dataon July 17, 2016 there were 82,086,488 in circulation, so it was enough that 9.6 million were in exchanges to reach a percentage as low as that registered at that time.
A context with less and less ETH in exchanges
On the other hand, in addition to the circulating amount of the cryptocurrency, the market context must also be analyzed. As CriptoNoticias has reported on several occasions during 2022, the ethers in exchanges are less and less and it is a trend which only confirms.
The reasons for this ETH leak can be several. Hypotheses such as increased use of decentralized finance (DeFi) protocols and bullish sentiment among traders were discussed in depth in another publication of this newspaper.
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Regarding the first point, it should be noted that DeFi now offers a less regulated space to trade cryptocurrenciesunlike centralized exchanges, which generally require KYC (Know Your Customer or identification rules of each user). In addition, these platforms also offer the possibility of earning interest with the deposits in them.
In addition, it is given that ETH holders have a bullish sentiment regarding the cryptocurrency and its market value. Therefore, instead of storing your funds in exchanges, with the risks involved in the use of wallets non-custodials or without custody, they leave them in self-custody purses waiting for the right moment to sell them at a higher price.
Meanwhile, Ethereum 2.0 is coming
All of the above is given in a context of high expectations for the arrival of Ethereum 2.0, a new model with which the network will leave proof of work (popularly known as mining) for transaction confirmation and move to proof of stake. This is a method that is based on validator nodes and consumes less energy resources to create new blocks in the chain.
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Although these expectations may be higher than what the change will actually offer, this seems to be having its effects – at least indirectly – on the market. One sign of this is the actions of ETH holders, who at the moment seem to have no intention of parting with their savings in this cryptocurrency.