The total amount of Ethereum coins that are being held on various centralized exchange addresses has fallen to the record lows, while the currency has hit May’s levels of $3,200.
According to the indicator, the current balance of Ethereum on CEXes is equal to 11 million ETH. The decline in the exchange supply began in May 2020 and has continued until now. The start of the supply reduction also correlates with the beginning of the rapid growth of the Ethereum price.
Usually, a progressive reduction or a low amount of cryptocurrencies on exchanges is considered a bullish signal. It means that Ethereum owners or any other crypto holders are not willing to realize their investment and prefer holding it on their wallets. Ethereum supply on exchanges hasn’t been at such low levels since 2018.
Recently, Ethereum has launched the EIP-1559 upgrade that changed the fee mechanism of the cryptocurrency and introduced a new fee-burning mechanism. The latter may lead to the deflation of the coin and it may drive a price increase in the future.
Vladislav Sopov