The amount of ethereum (ETH) on crypto exchanges has dropped to a level not seen since 2016. The decrease is mainly due to more and more ether being staked. Data blockchain analysis company Glassnode shows that yesterday only 14.85 percent of all ether in circulation was still on crypto exchanges.
ETH balances on exchanges continue to decline 📉👀 pic.twitter.com/oj2Db7ZpHM
— Crypto Crib (@Crypto_Crib_) May 26, 2023
More ethereum strikers
During the peak of the crypto bull market in 2021, we saw a historically high amount of ether in the hands of exchanges. Around 25 percent of all ETH was then held by exchanges. Still, a low amount of tokens on exchanges is, in principle, a good sign. It means that investors do not want to sell, and this creates upward pressure on prices.
In recent weeks, this declining supply seems to be gaining momentum. This is mainly due to the growing popularity of ethereum staking. On April 12, the Ethereum Shapella update took place. After a long wait, it finally became possible to withdraw staked ethereum.
Since the Shapella update, 4.4 million ETH has been staked. Currently there is ample 23 million ethereum included in the staking contracts. It seems that this amount will only continue to increase.
Centralized Entities With the Largest ETH Balance@ethereum balance on centralized exchanges has dropped to the level not seen since July 2016. Discover the most popular centralized entities for failure #Ethereum. pic.twitter.com/sJEX8yLkpn
— CryptoRank Platform (@CryptoRank_io) May 26, 2023
What does this mean for the future?
With the ability to withdraw staked ether, and thus keep it liquid, Ethereum staking has become a lot less risky. We wrote at the time of the Shapella update that this could significantly lower the threshold for institutional investors in the long term.
The future will show how this will actually materialize. But for now, the number of ETH strikers is rising rapidly. Currently, the crypto market seems to be recovering from the green first months of this year. Should the market pick up again in the coming months, it will be interesting to see how institutional investors react.