According to a recent tweet from Santiment on-chain data aggregator, the second largest cryptocurrency Ethereum has reached a new high regarding the flow of ETH deposits to exchanges.
However, this also likely means surging volatility for the price is coming.
ETH active deposits surge to new high
Per a report from Santiment, investors have been actively depositing ETH to crypto exchanges, and the value of this metric has reached an eight-month peak. The analysts' team of Santiment are currently looking into the matter to find the reason.
So far, they believe that this surge in active deposits is likely to signify increased volatility of the ETH price coming soon. This may be similar to the effect on the ETH price when the Merge upgrade was integrated in mid-September last year or the collapse of the FTX giant in the early days of November 2022.
As of now, exchanges have taken in nearly 9,200 unique ETH deposits — this is the highest amount since Sept. 15 last year — the day when The Merge was introduced on the Ethereum chain.
😮 #Ethereum's active deposits just hit an 8-month high. As we research the most likely cause, we can currently state that this likely will foreshadow upcoming increased $ETH volatility, similar to the result of spikes during the #merge & #FTX collapse. https://t.co/aBeHQudM52 pic.twitter.com/oHeypfUPvJ
— Santiment (@santimentfeed) May 5, 2023
At the time of this writing, Ethereum is changing hands at the $1,898 mark after declining from a recent price peak of $1,930 on April 30.
On Nov. 5, when FTX crashed, Ethereum sharply fell from $1,627 to $1,100 within a few days.
$291 million in ETH burned since The Merge
Thanks to the mechanism introduced in 2021 with the London hard fork, Ethereum developers have been able to burn ETH since then, sending a portion of the transaction fees to unspendable wallets. This way, they are reducing the circulating supply of the coin to make it more scarce. When the supply declines heavily, this can in theory allow the price to go up.
According to a tweet by Twitter user @misterrcrypto, this year so far, "Ethereum is getting burned like crazy." He believes this is happening because of the "meme coin season"; developers and communities of such meme cryptos as SHIB have been burning coins actively in the billions, and all of these meme cryptos are built on Ethereum, which means more transactions.
As for Ethereum, since Sept. 15, when The Merge was implemented, developers have managed to destroy 153,265.34 ETH due to the increased activity on the Ethereum network. This is the equivalent of $291,175,025.
@misterrcrypto reckons that when the bull market arrives, ETH will be burned in much bigger amounts.
#Ethereum is getting burned like crazy because of #MemeCoinSeason. 🔥
— Mister Crypto (@misterrcrypto) May 5, 2023
Since the merge, 153,265.34 $ETH ($291,175,025) has been burnt as a result of increased network activity.
Just imagine what will happen in the bull market. pic.twitter.com/WGsLBgGzZa
Denys Serhiichuk
Tomiwabold Olajide