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Ethereum Stored on Crypto Exchanges Sinks to a Two-Year Low, What This Means for ETH

On-chain analytics provider Santiment shared data showing that Ethereum(ETH) held on crypto exchanges currently stands at 13.35% of its total circulation supply. This is a trend not seen since November 23, 2018.

It could be interpreted to mean that the confidence of Ethereum holders is growing based on the long term value of this cryptocurrency.

Reduced selling pressure

The insights provided by Santiment might suggest a lower selling pressure of Ether as its price has stabilized above $450. The blockchain analytics provider tweeted:

“The percentage of total ETH being held on exchanges today (13.35%) has not been this low since November 23, 2018. The almost exact two-year milestone is a positive sign for Ethereum holders, who have historically benefited when supply is held.”

These statistics uncovered by Santiment correlate with insights shared last month by EthHub co-founder Antony Sassano that indicated that 60% of Ethereum supply had been at a standstill for more than a year.

This data shows the way people have been holding Ethereum coins in anticipation of the rollout of ETH 2.0, which is scheduled for February, have translated to positive sentiments, but delays of the mainnet have been inevitable. In September, ETH developers launched the Spadina testnet, which brought them one step closer to providing a proof-of-stake Ethereum public mainnet.

Low likelihood of Ethereum Whales selling off

Ethereum has been making headways in recent months because of its blockchain being heavily leveraged in the booming decentralized finance (DeFi) sector, as well for other projects like decentralized applications (Dapps) and smart contracts.

For instance, $100 million worth of Tether (USDT), a leading stablecoin, was recently transferred from the Tron network, a blockchain-based decentralized operating system, to the Ethereum blockchain.

These are some of the factors that indicate that ETH whales may be displaying a lower likelihood of dumping their reserves because of the notable milestones being made in this network. Santiment said:

“When the percentage of total ETH being held on exchanges is kept low, it indicates that large whale selloff probabilities will remain limited. With a PRO account, you can watch in real-time to see if ETH’s % of supply on exchanges creeps over 15%, which historically indicates downside movement.”

The sentiment the analytics provider asserts is that as long as ETH held on crypto exchanges remains below 15%, selloffs from whales will not be witnessed in the short-term.

Bitcoin’s Outflow from Exchanges still Heavy Despite Looming Correction, says Crypto Trader

After hitting lows of $44,935 in the last 24 hours, Bitcoin (BTC) is up by 5% to trade at $47,301 at the time of writing, according to CoinMarketCap. Bitcoin has been experiencing a pullback ever since it hit a record-high of $58,300 in the past week.

Veteran market and crypto trader Michael van de Poppe has noted that despite the current price correction, Bitcoin outflows from exchanges are still sizable. He acknowledged:

“Even in this correction, the outflow of Bitcoin from exchanges is still heavy. This means that people are buying their Bitcoin to hold in cold storage as an investment vehicle, and those are not selling. We’re still early. In a healthy correction.”

The crypto trader trusts that the present consolidation represents a healthy correction, as evidenced by outflows from exchanges, which shows a strong holding culture.

This information correlates with insights provided by on-chain analyst Rafael Schultze-Kraft that Bitcoin’s illiquid supply is continuously growing. He explained:

“The amount of illiquid Bitcoin supply in the network has grown more than the circulating supply since 2017.”

Illiquid BTC supply signifies a holding culture as more participants are storing Bitcoin for speculative or future purposes, which indicates a bullish behavior.

Bitcoin was up by 39% in February

Despite the ups and downs Bitcoin experienced in February, the leading cryptocurrency was able to close the month on a high. It recorded a 39% surge, as acknowledged by crypto analyst Chris Russi. He noted:

“Bitcoin still managed to close the month of Feb. up 39%. This comes even after ~25% drawdown from the $58K high it posted on Feb 21. All but 3 out of the last 10 Marches have produced negative returns, so most will be focused on seeing whether or not BTC’s seasonality repeats.”

Institutional investors continue pumping in sizable funds into Bitcoin, as evidenced by CoinBeast. The data provider revealed:

“The companies currently holding the most Bitcoin on their balance sheet ranked by holdings. 1.Grayscale- 649,130 BTC 2.MicroStrategy– 90,531 BTC 3.Tesla- 48,000 BTC 4.GalaxyDigital- 16,402 BTC 5.Square- 8,027 BTC.”

Time will tell how BTC closes in March based on Russi’s sentiments that only 3 of 10 Marches have closed in the negative.

Total Value Locked in Ethereum 2.0 Hits a Record-High Amid ETH Supply on Exchanges Nosediving

Ethereum 2.0 deposit contract continues to see an uptick in investments based on a surge in the total value locked (TVL).

Crypto analytic firm Glassnode said:

“The total value in the ETH 2.0 Deposit Contract just reached an ATH of 7,824,674 ETH.”

Market analyst Lark Davis had previously stated that the Ethereum 2.0 upgrade would prompt a 90% daily emission reduction from 12,800 to 1,280.

Ethereum has been witnessing various upgrades, which seek to boost the digital asset’s efficiency. The London Hardfork or EIP 1559 upgrade was the latest one to be incorporated, which triggered the first-ever deflationary block on the Ethereum network on August 5.

Ethereum supply on exchanges shrink

According to on-chain insight provider Santiment:

“Our metrics indicate an encouraging downtrend on ETH’s supply on exchanges. Traders have focused more on volatile & pumping coins, which is historically good for Ethereum.”

This is a bullish sign because it illustrates a holding culture. Furthermore, a drop in ETH supply on exchanges is usually correlated with a price increase.

Meanwhile, the interest from short-term traders on the Ethereum network is going through the roof. Data analytic firm IntoTheBlock explained:

“The price of ETH rising above $3,000 is propelled by a renewed interest by short-term traders. The number of addresses holding ETH for less than 30 days is up 43% since July and quickly approaching the ATH experienced in May. 3.87m addresses with a volume of 19.44m ETH.”

On the other hand, the amount of unique tokens moving on the Ethereum network, known as token circulation, has been increasing because they recently hit levels last seen in June. Token circulation and price are usually strongly correlated.

Ethereum 2.0, also known as the Beacon Chain, was launched in December 2020 and was regarded as a game-changer that sought to transit the current proof-of-work (POW) consensus mechanism to a proof-of-stake (POS) framework.

The proof-of-stake algorithm allows the confirmation of blocks to be more energy-efficient and requires validators to stake Ether instead of solving a cryptographic puzzle. As a result, it is touted to be more environmentally friendly and cost-effective. ETH 2.0 is also expected to improve scalability through sharding.