Ether Balance on Exchanges Nears Low

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The number of ether (ETH) on exchanges has hit a low not seen since July 2016 as staking saps available ether.

Data from Glassnode shows that as of Thursday, 14.85% of all ether was held in wallets owned by centralized exchanges. The market hasn’t seen such a low since ether was in its infancy in the summer of 2016.

In contrast, during the 2021 bull market, the FX balance was around 25-26%. Typically, low FX balances are a bullish sign because it means there is a limited supply of Ether available to buy, putting pressure on prices to rise.

Over the past few weeks, the growing popularity of staking has helped absorb market supply.

The introduction of the Shapella upgrade on the Ethereum network has triggered an increase in Ether staking, with over 4.4 million additional coins deposited since the upgrade, as large Ether holders opt to increasingly to generate passive income rather than liquidate their assets.

“This trend is likely to persist, especially given that deflationary forces are expected to propel Ether price significantly,” Binfinex analysts previously shared with CoinDesk. “Prior to this upgrade, potential stakeholders may have been deterred from staking their Ether tokens due to concerns that their funds could be locked in for an unacceptable length of time.”

All of this comes as crypto trading volumes drop by double digits.

Binance, the world’s largest cryptocurrency exchange, saw a 48% drop in spot trading volume for the second consecutive month in April, hitting $287 billion – the second lowest since 2021 – with its share Market share also narrowed to 46%, reflecting a broader 40% industry-wide decline due to macroeconomic uncertainties and the collapse of US banks.

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