• Ethereum (ETH) has seen a rapid decline in the supply on exchanges, now the lowest in 5 years at 18.1 million ETH, with only 15% of its total supply on exchanges.
• The drop has been swift since staking opened up in late 2020, with Bitcoin and stablecoins also fleeing exchanges resulting in thin liquidity.
• Volatility has risen as a result, leaving aggressive moves to the downside possible despite a bullish first quarter for the market as a whole.
Ethereum Supply on Exchanges at 5-year Low
Ethereum (ETH) has seen a rapid decline in the supply on exchanges, now reaching its lowest level in five years at 18.1 million ETH. This accounts for just 15% of its total supply being held on exchanges, an all-time low.
Staking Opens Up Liquidity Issues
The drop has been particularly swift since staking opened up in late 2020 – allowing users to lock up their ETH tokens – which eventually went live last September. Stakers have only recently gotten access to their tokens as the Shanghai upgrade went live last week. This is believed to be one of the main factors behind such drastic declines in liquidity across both Ethereum and Bitcoin markets as well as stablecoins; leading to thin liquidity and increased volatility across all crypto markets overall.
Bullish Market Despite Volatility
Despite this, Ethereum still enjoyed a bullish first quarter for the market as a whole and managed to reach close to $5,000 during 2021 before crashing back down below $1,000 later that same year. However, due to these decreasing levels of liquidity it does leave room for more aggressive moves to the downside should bearish sentiment take over again any time soon.
Capital Fleeing Crypto Markets
This is not just isolated to Ethereum either – 45% of stablecoin balances have exited from exchanges over the past four months alone; leading it back down towards October 2021 levels once again where there was much less activity taking place within the crypto space overall. Similarly, Bitcoin also experienced massive outflows from exchanges during this time period; now having 11.8% of its total supply held on them – another five year low mark for BTC prices.
Overall then it appears that capital is continuing to flee cryptocurrencies across all markets; leading us into what could be yet another extended bearish trend if things don’t turn around soon enough – not only for Ethereum but for all other cryptos too