On-chain data shows that Ethereum exchange supply has fallen to an all-time low recently, suggesting that investors may be piling up.
The supply of Ethereum on exchanges has continued its downward trend lately
According to data from the on-chain analytics company saintETH on exchanges is now at its lowest levels since the cryptocurrency began trading publicly in July 2015. “ETH supply on exchanges” is an indicator that measures the percentage of the total circulating supply of Ethereum currently in the wallets of all centralized exchanges.
When the value of this metric goes up, it means that investors are currently depositing their coins into the wallets of the exchanges. Since one of the main reasons holders transfer ETH to these platforms is for selling purposes, this type of trend can have downward effects on the price.
On the other hand, the decrease in the value of the index indicates that the exchanges are monitoring the withdrawal of the net asset amount at the present time. Such a trend, when it continues for a long time, can be a sign that investors are piling up, and thus can have a bullish effect on the value of the cryptocurrency.
Now, here is a chart showing the trend in the supply of Ethereum on exchanges over the past few years:
The value of the metric seems to have been going down since a while now | Source: Santiment on Twitter
As shown in the chart above, the supply of Ethereum on the exchanges has been declining for a few years now, which indicates that investors are constantly withdrawing from these platforms.
The index continued to decline during the rally, but there was a temporary break in the trend recently, as the gauge saw an increase for a short time. This rally was nothing significant, but the fact that it happened around the same time as the recent drop in the cryptocurrency’s price (which has now taken it below the $1,800 level) may be a sign that these deposits have been made to sell.
However, it wasn’t long before supply on the stock exchanges resumed its downward trend, meaning that new purchases may have taken place at the current relatively low prices.
After this latest continuation of the general downward trend of Ethereum supply on the exchanges, there is now only 10.1% of the total circulating supply left in the wallets of these exchanges, the lowest value the coin has seen since its opening week. in July 2015.
This all-time fundamental bottom in the index could be a positive sign for the cryptocurrency in the long run, as it shows growing awareness in the market about the risks of holding their coins on centralized exchanges.
It is currently unclear how long the current price decline will last, but the new pullbacks that are occurring could at least be a sign of the market still having buyers available.
ETH price
At the time of writing, Ethereum is trading around $1,700, down 10% in the past week.
ETH has plunged recently | Source: ETHUSD on TradingView
Featured image by Kanchanara on Unsplash.com, charts from TradingView.com, Santiment.net