The exchanges’ Ether (ETH) reserve continues to decline, despite being quite low. This trend points to the Ether supply shortage seen on major trading platforms following the launch of the Ethereum 2.0 staking deposit wallet.
Locked in the ETH 2.0 deposit contract, the value of Ether approached $ 4 billion in January. This amount is about 2 percent of the total Ether supply.
Decreasing the supply of Ether in exchanges will reduce the selling pressure on the cryptocurrency, especially if the demand for Ether increases with the rapid growth of the decentralized financial market.
Why isn’t Ether rising strongly?
The Ether price has not seen a strong bullish momentum compared to the amount of Ether circulating in the exchanges.
Analysts of the on-chain analytics platform CryptoQuant stated that:
“The Ether reserves of all central exchanges are decreasing. BTC reserves have been decreasing and increasing since January.”
There are two main reasons why Ether has spent the past two weeks consolidating. First, the increase in yields on 10-year US government bonds caused risky markets to depreciate overall. Second, Bitcoin (BTC) outperformed Ether.
On the other hand, both investors and on-chain analysts expect Ether to gain momentum again soon.
Anonymous investor named “Cactus”, if Ether clings to $ 1,750 said that new records could be seen:
“As long as we manage to neutralize sales and close the day at over $ 1,750, I’m looking forward to a new record.”
CryptoQuant CEO, Ki Young Ju, for the outflow of Ether from exchanges shows that organizations and high-income investors are saving said it was a positive sign.