Ethereum shares melt away, these are the consequences

Ethereum exchanges are fading as the number of deployments increases. Find out what impact these trends could have on the future of ETH.

Although both Bitcoin and Ethereum are currently stagnant on the price side, ETH in particular is developing its own trend behind the scenes on the blockchain. Recent data show a significant decline in ETH holdings on centralized crypto exchanges, while at the same time the number of Ether stacks is increasing. Both developments could have a bullish effect on Ethereum's long-term price trend.

The amount of Ether deployed has for the first time exceeded the limit of 21.7 million exceeded. At the same time, Ether on crypto exchanges is falling to 17.8 million ETH this is a low last seen in 2018. Both trends have fundamental effects on ETH's price dynamics.

A positive development for Ethereum?

The decline in the number of ETH holdings on exchanges means there is less ETH available for sale. This is illustrated by the following chart of Glass node: while in February 2020 about 30 percent of all ETH was still held by centralized crypto exchanges, it is now less than 15 percent.

This circumstance would make the price of ETH up if demand stays the same or continues to rise. In addition, Ethereum's drop in stock markets could indicate that investors do not plan to sell their Ether in the near future. This, in turn, could be a sign of optimistic sentiment among investors and have a positive impact on the price of ETH.

Ethereum strike rate reaches record high

Interestingly, this decline in exchange holdings goes hand in hand with increased activity in ETH strikes. Since the introduction of the Shapella update in May, the amount of stacked Ether increased from 19.3 million to more than 21.7 million. As CryptoQuant's data shows, this means that more than 18 percent of all ETH is now staked.

Increasing participation in staking removes more ETH from the market because stacked Ether is locked in for a period of time and cannot be sold immediately. This reduces the available supply of ETH, which can have a positive effect on the price if demand remains constant or increases.

Moreover, an increase in stakes could be seen as a sign of investor confidence in the ETH network. This could encourage other investors to also buy and deploy Ethereum, which could put additional pressure on the price.

Positive long-term outlook for Ethereum

In summary, both a decrease in the amount of Ether on centralized exchanges and an increase in the ETH strike rate can be seen as bullish for the price of Ethereum, as both factors can help reduce the available supply of ETH.

While the trends seem positive, they are not enough on their own to boost the ETH price. Lower availability of Ethereum on exchanges and more deployments alone are not decisive for ETH price trends. Other factors are crucial. These include market dynamics and regulatory developments. Technological advances in the Ethereum blockchain and macroeconomic influences also play a role. In addition, demand for Ether is a crucial factor. Although supply is decreasing, the price can only increase if demand stays the same or increases. Therefore, it is essential to consider these aspects when assessing the future price development of ETH.