Close to $1.6 billion dollars worth of Ethereum has been taken off of crypto exchanges this year. The drop in ETH balance on exchanges comes as Ethereum’s full merge to a proof-of-stake blockchain is expected later in the year.
Large outflows of a cryptocurrency token are typically considered to be a very bullish sign as it shows that investors and traders are not willing to sell their crypto and are storing it away. Just this past week, over $500 million in Ethereum was removed from exchanges, likely from bullish Ethereum investors anticipating higher prices for the ETH token.
Similarly Bitcoin (BTC) has seen its balance on exchanges also drop to a three year low last week. At the time of this article, the amount of Ethereum on exchanges is about 24 million ETH, which is worth roughly $71 billion dollars. That figure is the lowest balance since early December of 2018. According to IntoTheBlock, a crypto research firm, 180,000 ETH was taken off exchanges on just Tuesday of this week. The firm tweeted that that is the highest aggregated withdrawal since October.
In contrast to the balance of Ethereum on exchanges, the price of Ethereum has jumped up over 17% this week. The ETH token was trading at around $2,500 on Tuesday March 15th, and now sits at $2,950 on Saturday, March 19th. With less Ethereum on exchanges, selling pressure lowers and liquidity of the token rises, which typically will lead to price increases.
Ethereum 2.0 or Consensus Layer Causing a Lower Balance of Available Ethereum.
In addition to the lowering balance of Ethereum on exchanges, Ethereum is preparing for its merge to Ethereum 2.0 or Consensus Layer. Previously referred to as “Ethereum 2.0” or “ETH 2.0”, Ethereum’s “consensus layer” has recently reached the milestone of over 10 Million Ethereum staked. Deposits into the Ethereum networks contract address have now reached over $25 billion dollars displaying a high level of confidence in the cryptocurrencies future.
Staking crypto is a way investors or crypto holders can earn rewards by locking up their tokens on the blockchain thereby contributing to the overall security of the blockchain. One of the major differences with staking ETH from other proof of work digital assets is that you are committing to keep the coins locked up or staked on the Ethereum network (without access to them) until the ETH 2.0 (Consensus Layer) upgrade is completed, which is expected this year but could run into 2023 or later.