Percentage of Ethereum holdings on CEXs near all-time lows: Bullish signal for investors?

Glassnode analytics platform indicated that the percentage of Ethereum held on centralized exchanges is approaching all-time lows. The firm showed that only 14% of the total ETH supply was left.

On-chain data from Santiment also revealed that Ethereum’s supply on centralized exchanges dropped to 8.97M and was approaching its all-time lows. The analytics firm also noted that the supply of ETH on exchanges had dropped to its lowest in nearly 10 years.

ETH held on exchanges approaches all-time lows

Glassnode, an analytics firm, indicated that the percentage of Ethereum held on centralized exchanges plummeted to 14%, nearing its all-time lows. The Santiment analytics platform also highlighted on Friday that the supply of Ethereum on exchanges was approaching its all-time lows. The firm noted that Ethereum’s holders had brought the available supply on exchanges down to 8.97 million, the lowest since November 2015.

On-chain data showed that nearly 23 million ETH were in exchanges in May 2020. A year later, the amount dropped below the 18 million mark, and the digital asset’s price rallied from $215 and peaked close to $4,000 within the same year.

Santiment believes that the drop in ETH holders indicated that the virtual currency holders were unwilling to sell their assets for the current price. The firm argued that the holders seem determined to hold on to the digital asset until the price potentially goes higher again, as historically seen within some months or a year.

The financial market data platform also noted that the decline in ETH’s exchange supply may be driven by increased movement into staking and DeFi platforms. The firm believes that DeFi and staking options likely made the virtual asset scarce on exchanges, reducing immediate selling pressure. 

The New York Stock Exchange proposed last week to the U.S. Securities and Exchange Commission that Bitwise allow its Ethereum ETF (ETHW) to stake ETH held by its trust. BlackRock and Fidelity are also seeking approval to stake the digital currency within their exchange-traded funds.

“Thanks to the many DeFi and staking options, Ethereum’s holders have now brought the available supply on exchanges down to 8.97M, the lowest amount in nearly 10 years.”

– Santiment

The analytics platform also stated that Ethereum had been rapidly leaving crypto exchanges, with roughly 16.4% lower balances than at the end of January. The firm suggested that investors were moving their digital currencies into cold storage wallets for long-term holding, likely holding more conviction of Ether’s price surge in the future. 

Ethereum signals potential supply shock

Crypto trader Crypto General told his 230,800 X followers that it is “just a question of time before the big supply shock.” A significant drop in ETH supply across exchanges can signal a potential price increase soon, referred to as a “supply shock.” A surge in the digital currency can only happen if demand remains strong or rises to outpace the reduced demand.

Bitcoin had a similar outcome on January 13 after BTC reserves on all crypto exchanges plummeted to 2.35 million, hitting a nearly seven-year low last seen in June 2018. The digital asset surged a week later to a new high of $109,000 amid the inauguration of U.S. President Donald Trump.

Ethereum is currently exchanging hands around $2,030 at the time of publication, a 24% drop in the last month. “The Wolf of All Streets,” Scott Melker, argued that “Either Ethereum bounces here and this is a generational bottom, or it’s over.”

On-chain data from CryptoQuant showed that ETH’s Coinbase Premium Index, which shows its buying and selling pressure level in the U.S., has declined to around -0.056. The firm suggested that the drop indicated that short-term holders in the U.S. have refrained from adding to a potential bullish outlook.

The Global In/Out of Money (GIOM) also indicated that Ethereum’s price will likely encounter resistance above the $2,000 mark. IntoTheBlock believes that the digital asset could encounter a supply wall near $2,407. The firm noted that 12.36 million ETH holders have accumulated over 65 million ETH at that price range and were currently in unrealized losses. 

On-chain data also showed that Ethereum spot ETFs recorded four consecutive weeks of outflows. Farside data indicated that ETH exchange-traded funds realized outflows of $102.9 million, with BlackRock’s iShares Ethereum Trust (ETHA) experiencing the largest outflow at $74 million. The analytics firm also noted that the largest single-day ETH outflow occurred on March 18 after investors withdrew $52.8 million from the funds.

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