- he Ether (ETH) supply on crypto exchanges hit a five-year low, signaling potential bullish market conditions.
- The FTX collapse and Shapella upgrade significantly contributed to the decreased ETH balances on centralized exchanges.
- Despite the migration away from exchanges, the majority of ETH was not sold but returned to staking.
Ether (ETH), the renowned cryptocurrency, reached a milestone on May 26 as the quantity available on crypto exchanges fell to its lowest point in five years. With a mere 17.86 million ETH remaining on exchanges, this marked a significant downturn witnessed only in April 2018.
The insightful data from Glassnode reveals that just slightly less than 15% of the total Ether supply currently finds itself on centralized exchanges, a stark contrast to the hefty 25% that populated exchanges during the enthusiasm of the 2021 bull market.
The dwindling ETH supply commenced a downward trend in September 2022, taking a steep dive following the FTX incident five months ago. Parallel to this descent, Ethereum wallet addresses harboring over 100 ETH have seen their numbers diminish to the lowest in six months.
Significant incidents have likely shaped this retreat of ETH from centralized exchanges. The first incident revolved around the unfortunate collapse of the FTX crypto exchange, which catalyzed a movement of users transferring their digital assets from exchange wallets into their custody. The second, and arguably more impactful, was the much-anticipated Shapella upgrade.
Shapella paved the path for many validators to liberate their staked ETH. Despite widespread assumptions, a minor faction of validators chose to unstake, whereas the lion’s share merely withdrew their staking rewards.
This migration of assets from exchanges often signals a bullish trend, suggesting that traders are quick to offload their holdings at the present price point. In the case of Ethereum, the main driver behind the shrinking exchange supply is the re-staking of ETH.
Prominent crypto exchanges, including Binance, Bitfinex, Kraken, and more, which backed the Shapella upgrade, experienced a notable exodus of ETH from their respective exchange wallets, contributing to the overall dwindling balance. In the week succeeding the Shapella upgrade, staked ETH volumes outpaced those being withdrawn. Glassnode’s further analysis hinted that less than 1% of staked ETH would likely hit the market. Hence, a considerable portion of the ETH that exited centralized exchanges returned to staking.
Investor Optimism Soars for Ethereum
As of May 2023, Ethereum (ETH) holds a good aura, with investors maintaining a bullish stance. Despite its current trading value standing at $1897.57 per ETH—61% shy of its historical peak at $4891.70—market optimism about Ethereum’s future trajectory remains high.
This investor confidence was galvanized by recent remarks from the so-called Bitcoin Jesus, who earmarked Ethereum as the leading candidate for worldwide crypto acceptance. Adding to this positive sentiment, financial juggernaut JPMorgan made headlines when it unveiled a whopping $900 billion implied Bitcoin price anchored in gold, simultaneously issuing a cautionary prediction about an imminent Ethereum upgrade.
Investor faith in Ethereum has further benefited from the success of Ethereum-based projects, including DogeMiyagi, The Sandbox, and Shiba Inu tokens. Cumulatively, these factors suggest a resoundingly bullish outlook for Ethereum post its recent updates.