According to data from Glassnode, an on-chain analytics firm, it has been found that the Ethereum balance on exchanges has been declining in recent times. Similar to Bitcoin, the exchange balance of Ethereum has hit record-low figures.
Data suggests that the Ethereum exchange balance has dropped to a five-year low. Currently, the number of Ethereum being held on exchanges stands at 17.86 million. Reportedly, this is the lowest value since April 2018.
As highlighted in the graph, the Ethereum balances on exchanges have continued to decline since mid-2020. However, the pace escalated around September last year as the network transitioned to proof-of-stake (PoS).
In 2022, during the event referred to as “The Merge,” the legacy Ethereum blockchain merged with the Beacon Chain, effectively switching Ethereum from a Proof-of-Work (PoW) to a PoS network. The switch to the PoS mechanism is believed to be less energy-intensive and provides a platform for implementing new scaling solutions.
Analysts suggest that in recent times, the withdrawals have been outpacing deposits for the majority of the time. This has resulted in withdrawals of over 1.59 million Ethereum which have been taken off exchanges.
Additionally, the drop in Ethereum’s balance on exchanges that started in September last year has kept in tandem with the broader market trend observed in the case of Bitcoin. The world’s largest crypto by market capitalization, has also witnessed a sharp drop, particularly between October 2022 and December 2022.
While in recent times, Bitcoin’s balance on exchanges has been declining, it increased for a significant period since the start of the year, potentially indicating the market’s anticipation of price movements. Recently, the Bitcoin exchange balance has fallen below 12%, the lowest value achieved since this was first achieved at the beginning of the year.
The graph above shows the journey of Bitcoin’s balance on exchanges since its inception in 2011. There has been exponential growth in the balance held on exchanges, particularly around the COVID crisis of 2020. At that time, the peak was recorded at 3.2 million Bitcoins whereas currently, the balance on exchanges resides at 2.3 million Bitcoins, about a 28% decline from its peak.
Notably, the declining balance of both the assets on exchanges signifies the positive sentiment among the investors for the assets. At the time of writing, Ethereum is changing hands at $1,815.56, about a 0.15% increase over the past 5 days whereas Bitcoin is trading at $26,724.60, about a 0.62% decrease over the same period.