Ethereum supply on exchanges hits new all-time lows, signaling bullish trend.
Recent on-chain data indicates that the amount of Ethereum available on exchanges has been decreasing, which could be a positive sign for the asset.
Ethereum Supply On Exchanges Has Gone Down Recently
According to Santiment, an on-chain analytics firm, the amount of Ethereum available on exchanges has continued to decrease. The relevant metric used to measure this is called “supply on exchanges,” which determines the percentage of Ethereum supply stored in centralized exchange wallets.
When the metric increases, it means that more coins are being added to the exchange supply. Typically, investors deposit their Ethereum on exchanges for selling purposes, so this trend can have a negative impact on Ethereum’s value.
However, when the metric decreases, it implies that more holders are withdrawing their coins from exchanges. This trend, if sustained, can suggest that investors are accumulating Ethereum, which could be a positive sign for the cryptocurrency.
The graph below shows the trend of Ethereum supply on exchanges over the last few months:
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The value of the metric seems to have been going down in recent days | Source: Santiment on Twitter
The graph indicates that the amount of Ethereum available on exchanges has been decreasing over the past few weeks, indicating that investors are consistently withdrawing their coins from exchanges.
When the withdrawals initially began, the metric had reached an all-time low (except for the first week when the asset was publicly traded). As the holders continued to transfer their Ethereum out of exchanges, the metric continued to hit new all-time lows. Interestingly, even after Ethereum’s recent sharp rally, the metric has remained on a downward trend.
Usually, during periods of rapid increase in Ethereum’s value, the supply on exchanges tends to increase as some investors look to cash in on the profit opportunity. However, since the metric has only continued to decrease recently, it is possible that there is enough buying happening to offset any selling.
Santiment has also included data for the “average fees” metric in the chart, which measures the average fees that investors attach to their Ethereum transactions. The graph indicates that this metric has been relatively low recently. Even though there has been a rally in Ethereum’s value, network activity has not yet surged, as fees tend to rise when there is a high volume of traffic on the blockchain.
The analytics firm notes that this setup is similar to what was observed in March, after which Ethereum saw a rapid rise to the $2,100 level.
As of writing, Ethereum is trading at around $1,800, up 12% in the past week.
The asset's value has recently seen a sharp surge | Source: ETHUSD on TradingView