ETH balance on crypto exchanges falls to lowest level since 2018

Nearly $1.61 billion worth of Ethereum tokens have left crypto exchanges so far this year, and the Ethereum protocol may fully transition to PoS consensus this summer.

The amount of Ethereum’s native token (ETH) deposited on crypto exchanges has fallen to its lowest level since September 2018, suggesting traders are preferring to hold on to the token in hopes that prices will rebound in 2022.

Notably, according to data provided by Glassnode, nearly 550,000 ETH — worth about $1.61 billion — has flowed out of centralized exchanges so far this year. The massive outflow has reduced the net ETH balance on exchanges to 21.72 million ETH, down from an all-time high of 31.68 million ETH in June 2020.

Largest weekly ETH outflow recorded since October 2021

Interestingly, data from IntoTheBlock shows that more than 30% of all ETH outflows in 2022 occurred at the beginning of this week. In detail, more than 180,000 ETH left the crypto exchange on March 15, and as of March 18, the weekly outflow was worth just over $500 million.

Chainalysis data shows similar data, with an average of 120,000 ETH flowing out of exchanges every day this week, which is a bullish sign. An excerpt from the report is as follows:

“If there are more market participants who want to sell than want to buy, and buyers choose to store assets on exchanges, then the assets held on exchanges will increase.”

IntoTheBlock offered a similar upside prediction, citing a fractal from October 2021 that saw ETH’s price rise 15% ten days after the Ethereum network detected a large outflow of ETH from centralized crypto exchanges.

ETH Supply Squeeze

IntoTheBlock pointed out that as the amount of ETH withdrawn from exchanges increased this week, about 190,000 ETH entered Lido's "stETH liquid stakin" pool.

In short, Lido is a non-custodial staking service protocol that helps users overcome the barriers associated with staking on the Ethereum 2.0 beacon chain, including the requirement to stake at least 32 ETH. In addition, Lido proposes to solve the capital efficiency problem by issuing stETH, a tokenized version of staked ETH.

Over the past 30 days, ETH holders have staked more than 1 million ETH in Ethereum 2.0 contracts, and as the protocol prepares to fully switch to PoS consensus in the summer, the probability of more ETH flowing out of the circulating supply has increased.

“Lol. No one told those poor bastards that there would be a liquidity squeeze on ETH in a few months. No new ETH will enter circulation between the merger (June or so) and the Shanghai upgrade (December or so). I want to text them but I don’t even have their number. Do you? Poor people.”

— superphiz.eth (@superphiz) March 16, 2022

ETH price continues to rebound

Bullish sentiment surrounding Ethereum’s transition to PoS has pushed Ethereum into rally mode this week.

In detail, the price of ETH has rebounded by more than 17% so far this week, approaching $3,000. Interestingly, as shown in the chart below, the upward pullback stems from the technical level, the support of the ascending trendline, and recent history limits the bearish outlook for Ethereum.

However, as Cointelegraph previously reported, ETH’s gains may not be too great due to another technical factor: a descending trendline resistance that has stifled its upside attempts since January 2022.

Together, these trendlines appear to be forming a continuation pattern called a symmetrical triangle, indicating that ETH is likely to move in the direction of its previous trend, which is down. As it stands, ETH is likely to fall back towards the support trendline of the triangle as it retreats from its resistance trendline.