On May 26, the total quantity of Ether held on crypto exchanges fell to a five-year low, bringing the total amount of Ether held on exchanges to 17.86 million. This dramatic drop in ETH exchange supply has not been seen since April 2018.
According to Glassnode data, centralized exchanges today hold only 14.85% of total Ether supply, compared to 25-26% during the 2021 bull run.
The reduction in ETH supply began in September 2022, with a large drop following the FTX crisis in November. Aside from the exchange balance, the number of Ethereum wallet addresses holding more than 100 ETH has dropped to a six-month low.
Read Also: Ethereum Decentralized Exchange Uniswap Records $620 Billion in Trading Volume This Year
Two key factors could have caused the recent drop in ETH holdings on centralized exchanges. The first is the demise of the FTX crypto exchange, which prompted many people to transfer their crypto assets from exchange wallets to self-custody wallets; the second, and most important, is the Shapella upgrade.
📉 #Ethereum $ETH Number of Addresses Holding 100+ Coins just reached a 6-month low of 46,858
View metric:https://t.co/FbjiMG3uFX pic.twitter.com/uzHN7H2qRy
— glassnode alerts (@glassnodealerts) May 18, 2023
Shapella makes it possible for thousands of validators to withdraw their ETH stakes. However, contrary to common assumption, only a small percentage of validators elected to unstake, while the vast majority withdrew their staking profits.
The removal of assets from exchanges is regarded as a bullish indicator, indicating that traders do not intend to sell at the current price. In the case of Ethereum, the most obvious explanation for the diminishing exchange supply is re-staking ETH.
Major cryptocurrency exchanges like as Binance, Bitfinex, Kraken, and others that supported the Shapella upgrade observed a significant outflow of ETH from their exchange wallets, resulting in a decrease in current balance.
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