One of the prominent digital assets, Ethereum (ETH), has recently garnered significant attention due to a particular phenomenon in its metrics: the scarcity of Ethereum supply on exchanges.
According to a Santiment report, the amount of Ethereum available on exchanges has reached its lowest level in the past five years. This development has sparked intense debate within the cryptocurrency community and raised questions about whether this scarcity could be a bullish signal for ETH’s price.
At the beginning of the week, Ethereum futures ETFs were launched with great anticipation. However, these financial products have not received the expected attention and demand thus far. Despite the lack of interest in ETFs, on-chain data indicates that investor interest in Ethereum remains robust.
A Steady Flow to Reserves
What has caught the attention of analysts is the consistent outflow of Ethereum from exchanges. In a single day, approximately 110,000 ETH, equivalent to $181 million, were withdrawn from exchange platforms. This represents the largest outflow since August 21, 2023, and suggests that investors are choosing to keep their assets away from exchanges.
😮 #Ethereum saw about ~110K $ETH ($181M) move off of exchanges Wednesday, the largest outflow day since August 21st. The amount of non-exchange Ethereum now sits at an #AllTimeHigh 115.88M $ETH, while its exchange supply is at its lowest in ~5.5 years. https://t.co/PUOWGt0KS0 pic.twitter.com/u54pp6LZij
— Santiment (@santimentfeed) October 5, 2023
The amount of Ethereum held in external wallets has reached a historical high of 115.88 million ETH. This figure is a testament to the growing trend among investors to hold their assets in personal wallets rather than on exchanges. The reasoning behind this could be the pursuit of greater security and control over assets, as well as the opportunity to participate in the burgeoning trends of staking and decentralized finance (DeFi).
What makes this trend even more intriguing is the bullish interpretation by certain analysts. Historically, any increase in the withdrawal of tokens from exchanges has been considered a bullish signal for the market. This logic is based on the idea that investors are more willing to hold their assets outside of exchanges when they anticipate an increase in their value. The decrease in the supply available on exchanges can also boost demand, potentially driving prices higher.
As for the price of Ethereum, despite fluctuations, it remains within a significant range. At the beginning of the week, ETH reached $1,750, and at the time of writing this article, it is trading in the range of $1,620 to $1,650.