ETH Holdings on Exchanges Hit Lowest Level Since 2016
The amount of Ethereum (ETH) held on centralized exchanges has just reached its lowest level since the summer of 2016, driven by the growing trend of staking within the community.
ETH Holdings on Exchanges Hit Lowest Level Since 2016
The amount of ETH on exchanges has dropped to its lowest point since July 2016. This decline is attributed to holders moving their ETH into staking.
Data from Glassnode reveals that only 14.85% of the total ETH supply is held in CEX wallets. This is the lowest level recorded since the summer of 2016. The percentage peaked at 30% during the 2017 bull run and was around 25-26% in the latter half of 2021.
Percentage of ETH on Exchanges (Blue Line). Source: Glassnode
The presence of abundant ETH on exchanges historically correlates with active trading during market uptrends.
The current low ETH levels on CEXs are a result of the Shanghai upgrade, which has redirected a significant amount of capital back to the blockchain through liquid staking protocols such as Lido Finance, Frax Protocol, and Rocket Pool.
Lido Finance Operational Model
In addition to these protocols, users can also stake with exchanges. For example, Binance's staking wallet recently received nearly $70 million worth of ETH, making it the third-largest staking wallet in the past month, according to Arkham.
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— Arkham (@ArkhamIntel) May 26, 2023
2 hours ago, Binance International's largest Staking address received another $69.4M worth of ETH, sending it all to the Beacon Chain.
This address has staked a total of $1.29B worth of ETH since it began operations, and is the 3rd largest staker over the past month! pic.twitter.com/FI1QYDKyjK
2 hours ago, Binance International's largest Staking address received another $69.4M worth of ETH, sending it all to the Beacon Chain.
This address has staked a total of $1.29B worth of ETH since it began operations, and is the 3rd largest staker over the past month! pic.twitter.com/FI1QYDKyjK— Arkham (@ArkhamIntel) May 26, 2023
Some analysts believe the staking trend will continue:
“This trend is expected to persist as Ether becomes deflationary, which will drive ETH price growth in the long term. Users are increasingly motivated to stake ETH.”
In addition to deflationary pressure, the rising staking reward rates also contribute to this trend. As reported by Coin68, Ethereum's staking rewards have hit a new record due to the memecoin craze, which has significantly increased gas fees.
ETH is currently trading around $1,812, showing minimal movement in the third week of May.
1h Chart of ETH/USDT on Binance at 05:00 PM, 26/05/2023
