Ethereum: Supply on Exchanges Rapidly Declines After the Merge
According to on-chain data from Santiment, the Ethereum supply held on centralized exchanges has decreased by 37% since the network's upgrade to a Proof-of-Stake consensus mechanism in September of last year.
This indicator is used to measure the total amount of Ethereum tokens held by centralized exchanges. When the supply on exchanges increases, it means investors deposit more coins to exchanges, which can have bearish implications for the asset’s price since it indicates an intention to sell.
Conversely, a decreasing value suggests a net amount of supply is leaving exchanges, which can be seen as bullish for the coin since the available selling supply is shrinking.
📉 #Ethereum has dropped -13% since peaking at $1,688 back on February 7th. However, the good news is that the amount of available $ETH sitting on exchanges (and available to sell) continues to fall. Since the #merge, there are 37% less coins on exchanges. https://t.co/HOnHO6iLpJ pic.twitter.com/YpReloS8iT
— Santiment (@santimentfeed) February 13, 2023
The chart provided illustrates that the Ethereum supply on exchanges decreased from 19.12 million ETH on the day of the upgrade to 13.36 million ETH today, which is a capital loss of 37%. This reduction in supply is good news for the Ethereum market, according to Santiment.
The most significant drawdown in the indicator occurred after the collapse of FTX, which renewed investor fears around centralized exchanges, leading them to move their coins to offsite wallets.
Although the price of Ethereum has declined by 8% in the past week, the Ethereum supply on exchanges has seen a sharper decline following this price dip, which could indicate that investors are accumulating more Ethereum while it’s at a lower price.
The past few days ETH rallied along with the rest of the market and last week’s losses were erased. The decline of Ethereum’s supply on exchanges may be a signal that investors are steadily accumulating ETH.
At the time of writting ETH is trading at $1,690 after an increase of almost 9% in the past 24 hours.