A historic low in ether supply on major exchanges could signal a shift towards cold storage and increased adoption of DeFi platforms.
The number of eth held in wallets tied to centralized exchanges has dropped to its lowest point since November 2015. According to data from CryptoRank and Santiment, this decline may have significant implications for the market.
Ether (ETH) is the native cryptocurrency of the Ethereum network.
The total supply of ether is capped at 100 million, with a maximum of 18.9 million coins that can be mined through proof-of-work consensus algorithm.
As of 2022, over 72 million ethers have been mined, leaving around 27 million remaining for future mining.
The supply of ether is adjusted every two years through the Ethereum protocol's built-in difficulty adjustment mechanism, ensuring a steady and predictable supply.
The Exodus Continues: Reduced Liquidity on Centralized Exchanges
A similar trend was observed with Bitcoin (BTC), which saw a price surge after hitting a seven-year low on exchanges in January. The continued exodus of coins from centralized trading platforms may result in reduced availability of coins in the market, potentially leading to an upward price surge.
The decline in ether supply on centralized exchanges is attributed to investors moving their holdings to cold storage, reducing available liquidity. This trend suggests that users are becoming increasingly cautious about holding their assets on exchanges, where they are vulnerable to security risks and volatility.
A Shift Towards Cold Storage
The data from CryptoRank and Santiment indicates that the number of ether held in wallets tied to centralized exchanges has dropped to 8.97 million tokens, its lowest point since November 2015. This decline may be a result of investors opting for cold storage solutions, which provide greater security and control over their assets.
Ether is a cryptocurrency developed by the Ethereum network.
It's used to pay for transaction fees and computational services on the platform.
Created in 2015, ether is mined through complex mathematical equations.
As of 2022, it has a market capitalization of over $200 billion.
Ether's value is determined by supply and demand in the global cryptocurrency market.
The Ethereum network, which underlies ether, aims to create a decentralized internet, enabling secure and transparent data exchange.
A similar trend was observed with Bitcoin (BTC), which saw a price surge after hitting a seven-year low on exchanges in January. The continued exodus of coins from centralized trading platforms may lead to reduced market availability and potential price surges.
Potential Implications for the Market
The decline in ether supply on centralized exchanges has significant implications for the market. Reduced liquidity on these platforms may lead to increased volatility, making it more challenging for investors to buy or sell assets. This, in turn, could result in an upward price surge for ether, as investors become increasingly cautious about holding their assets on exchanges.
The trend also suggests that users are becoming more aware of the risks associated with holding assets on centralized exchanges and are opting for alternative solutions, such as cold storage. This shift may lead to increased adoption of decentralized finance (DeFi) platforms and other asset management solutions that prioritize security and control over traditional exchange-based models.
Decentralized finance, also known as DeFi, is a financial system that operates on blockchain technology and smart contracts.
It allows for peer-to-peer transactions without the need for intermediaries like banks.
DeFi applications include lending, borrowing, and trading cryptocurrencies.
The global DeFi market has grown significantly since 2020, with over $100 billion in total value locked (TVL) in DeFi protocols.
Key players in the DeFi space include Ethereum, Polkadot, and Binance Smart Chain.
- coindesk.com | Ether Supply on Centralized Exchanges Hits 9 Year Low
