ETH Balances on Exchanges Is Down 27% Since the Year Started
- The amount of Ethereum (ETH) held on exchanges has significantly declined since the beginning of the year.
- ETH balances held by exchanges have declined 27% over the course of 2022 so far.
The analysis shows that Ethereum on centralized cryptocurrency exchanges has gradually decreased over the past few months. On January 1st, ETH’s balance on exchanges was around 26M ETH but has since declined to 19M ETH as of Dec 20th.
According to CryptoMonday CEO Jonathan Merry:
The decrease in ETH balances on exchanges could have a few different causes. Firstly, it could be indicative of greater investor confidence in the Ethereum network and its ability to hold value. Investors who feel more secure with their holdings may be keeping them off-exchange and storing them in wallets or other locations.CryptoMonday CEO, Jonathan Merry
Merry also notes that speculative trading could be another possible cause of the decreasing ETH balance on exchanges. "Traders may be accumulating ETH off-exchange and then using their stored ETH to speculate on the Ethereum price, rather than buying it directly from an exchange," he said.
Ethereum Price Grinds Lower
The decrease in the amount of Ethereum held on exchanges could indicate that investors have been accumulating the digital asset and taking it off the market. This is noteworthy, given that many analysts were expecting Ethereum to surpass its all-time high of $4,815 in 2022.
The decrease in ETH’s balance on exchanges could also be due to a combination of different factors. For instance, decentralized finance (DeFi) protocols have been gobbling up Ethereum since the start of this year. DeFi projects such as Aave and Uniswap are two of the biggest consumers of ETH, taking hundreds of thousands of ETH off the market.
What to Expect From Ethereum’s Next Big Upgrade
Some investors might be taking Ethereum out of exchanges in preparation for the Shanghai upgrade. The upgrade is expected to cause over a million ETH to move from centralized exchanges to staking pools. This would further decrease Ethereum’s balance on exchanges if it takes place as anticipated.
With anticipation, the Ethereum community anticipates the imminent upgrade that will address staking withdrawals for ethereum on its Beacon chain, lower Layer-2 blockchain transaction fees and introduce Shard Blob Transactions - a precursor to complete sharding capabilities in the future. If these changes are successful, it could lead to a surge in ETH prices. Investors should keep an eye on the Ethereum network to see how the upgrade affects its price and overall market sentiment.