Ethereum Balance on Exchanges Approaches All-Time Low

Data from Glassnode shows that as of Thursday, 14.85% of all Ether is held in wallets owned by centralized exchanges. The market has not seen such a low since ether was in its infancy in the summer of 2016.

In contrast, during the bull market of 2021, the foreign exchange balance was around 25-26%. Typically, low currency balances are a bullish sign as they mean the supply of purchasable ether is limited, thus putting upward pressure on prices. The number of Ethereum (ETH) on exchanges has reached a low not seen since July 2016 as staking depletes available ether.

Over the past few weeks, the growing popularity of staking has helped draw supply from the market. The introduction of the Shapella upgrade to the Ethereum network has triggered an increase in staking ether, with more than 4.4 million additional coins deposited since the upgrade, as large ether holders are increasingly choosing to generate passive income over liquidating their holdings.

Binfinex analysts said in their previous comments:

“This trend is expected to continue, especially given that deflationary forces are expected to increase the price of Ether significantly. Prior to this upgrade, potential stakeholders may have been dissuaded from staking ether tokens due to concerns about their funds being locked for an unacceptably long time.”

All of this is happening with crypto trading volumes falling into the double digits. Binance, the world’s largest cryptocurrency exchange, saw its spot trading volume drop 48% for the second month in a row in April to reach $287 billion – the second lowest since 2021 – with market share also falling to 46% on the macroeconomic It reflected a broader decline of 40% across the industry due to uncertainties and US bank collapses.