Nearly $1.61 billion worth of Ethereum tokens has exited crypto exchanges so far this year, ahead of the potential full transformation of its protocol to proof-of-stake in the summer.
The amount of Ethereum’s native token, Ether (ETH), held on cryptocurrency exchanges has fallen to its lowest levels since September 2018, signaling the traders’ intention to hold the tokens in hopes of a price rally in 2022.
Notably, nearly 550,000 ETH tokens — worth around $1.61 billion — have left centralized trading platforms so far this year, according to data provided by Glassnode. The massive outflow has reduced exchanges’ net balance of Ether to 21.72 million ETH, down from its all-time high of 31.68 million ETH in June 2020.
The Largest Weekly ETH Outflow since October 2021
Interestingly, more than 30% of all Ether withdrawals from exchanges witnessed in 2022 appeared earlier this week, data from IntoTheBlock shows. In detail, more than 180,000 ETH left cryptocurrency trading platforms on March 15, bringing the value of the weekly outflow to just over $500 million as of March 18.
Data from Chainalysis showed similar readings, revealing that Ether tokens may have exited exchanges this week at an average of around 120,000 per day, a bullish sign. Quoted from Chainanalysis, “Assets held on exchanges increase if there are more market participants willing to sell than buying and if buyers choose to store their assets on exchanges.”
IntoTheBlock provided a similar bullish outlook while citing a fractal from October 2021 that saw the price of Ether rise 15% ten days after the Ethereum network detected massive withdrawals of ETH from centralized cryptocurrency exchanges.
Ethereum Supply Crisis is Underway
The surge in Ether withdrawals from exchanges this week coincided with around 190,000 ETH moved to Lido’s “stETH liquid staking” pools, IntoTheBlock noted.
To recap, Lido is a non-custodial staking service that allows users to overcome the challenges associated with staking on the Ethereum 2.0 Beacon Chain, including the requirement to stake a minimum of 32 ETH or its multiples. Furthermore, Lido proposes to solve the problem of capital efficiency by issuing stETH, the tokenized version of staked ETH.
In the last 30 days, Ether holders have added more than 1 million ETH to the Ethereum 2.0 contract. In addition, as the protocol prepares to switch entirely to proof-of-stake in the summer – in the wake of its “Merge” earlier this week on the Kiln testnet – the likelihood of more Ether tokens running out of active supply has increased.
ETH Price Rebound Continues
The optimism surrounding Ethereum’s move to proof-of-stake has sent Ether into bounce mode this week.
ETH price is up more than 17% so far this week to nearly $3,000. Interestingly, the bullish pullback originated at a technical level – rising trend line support with a recent history of capping Ether’s bearish outlook.
As Cointelegraph previously reported, Ether could clip its gains due to another technical level, this time a descending trend line resistance that has also been instrumental in capping its upside attempts since January 2022.
Together, these trend lines appear to have formed a continuation pattern called a symmetrical triangle, indicating that Ether will likely go in the direction of its previous trend, i.e. down. For now, ETH could pull back towards the support trend line of the triangle on a pullback from its resistance.
By Audy Castaneda
