The amount of Ether (ETH) on all cryptocurrency exchanges has dropped dramatically in the last 12 months.
The blockchain analytics firm, CryptoQuant, reported that Ethereum reserves on trading platforms fell from 26.29 million ETH to 19.22 million ETH year-over-year (YoY), which shows that the preference of traders to keep their tokens increased.
At least the price action of Ether in the same period indicates the same. Between August 25, 2020 and the time of publication of this analysis, the ETH / USD pair soared slightly more than 730%, going from 407 to 3,190 dollars, indicating an erratic inverse correlation between Ethereum token prices and its reserves across all exchanges.
In detail, traders often prefer to keep their crypto assets on exchanges when they want to speculate with them in the short term. Otherwise, they transfer these funds to private wallets to control their own keys, a strategy that stems from the fear of losing funds due to hacks and similar security flaws in cryptocurrency exchanges.
ETH deposits to exchanges decreased
Another on-chain indicator, developed by CoinMetrics to track the total number of Ether deposits to exchanges, also alerted to the feeling of retention among Ethereum traders. He noted that ETH deposits across all trading platforms had dropped 21.11% year-over-year, from 413,772 to 326,408 ETH tokens.
But in the last 30 days, ETH deposits have fallen dramatically 47.81%, indicating that many investors expect higher prices in the long term.
In the meantime, the number of unique addresses owning any amount of Ether in the last 30 days is up 1.67%, coinciding with a 42% rise in the ETH / USD pair in the same period. On a yearly timeframe, the unique address count has increased by 30.87%.
The sentiment of holding Ether gained traction in the days before and after a historic Ethereum network update on August 5, 2021. Dubbed the London hard fork, the software update implemented a proposal called EIP-1559 that enabled the burning of gas rate on the Ethereum network.
This has added some deflationary pressure as a result. In the first 20 days after the implementation of EIP-1559, the network has burned almost 92,595 ETH worth about USD 295.85 million, according to WatchTheBurn.com.
More Ether came out of the circulating supply as Ethereum invited participants to deposit 32 ETH to become a validator on its next proof-of-stake blockchain. Beacon Chain reports that the so-called Ethereum 2.0 smart contract has attracted just over 6.9 million ETH worth about $ 22 billion.
Furthermore, the demand for Ether continues to grow due to the continued expansion of the Ethereum ecosystem, which contains decentralized finance (DeFi) projects and non-fungible tokens.
Last week, Lyn alden, founder of Lyn Alden Investment Strategy, called the London update a “strategically bullish” event, noting that it could easily push the ETH price past $ 5,000.
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