According to the Glassnode Tweet, ETH balance on the cryptocurrency exchanges at the end of last week reached a 15-month low of 15.4 million ETH (about $20.5 billion).
– glassnode alerts (@glassnodealerts) January 23, 2021
The withdrawal of crypto asset began on January 19 — which shows that in a few days, ETH worth about $1.6 billion was withdrawn from the exchanges.
According to the Whale Alert service, most of the coins were transferred from large cryptocurrency exchanges to anonymous wallets. Quantum Economics analyst Pedro Febrero said there are three reasons why so much ETH has been withdrawn from exchanges.
First, he suggested that users have started depositing ETH in DeFi protocols.
But, according to DeFi Pulse, the number of ETH deposited in the DeFi protocols decreased from 7 million coins on Tuesday to 6.9 million on Wednesday, and then again to 7 million in the last week.
Febrero also suggested that the number of ETH staked in Ethereum 2.0 has increased by more than 320% since December 2020.
On January 19, 170,000 ETH was staked in Ethereum 2.0, and on January 20, another 200,000 coins were staked. This is about a third of the ETH withdrawn from the exchanges.
Febrero also suggested that institutional investors, such as Grayscale investors, are accumulating ETH. However, according to the BYBT website, Grayscale did not buy more ETH for its public trusts.
The explanation of the remaining ETH withdrawn from the exchanges is difficult to determine. Perhaps retail investors have started moving crypto assets from exchanges to their wallets.
“In our opinion, the withdrawal of Ethereum from the exchanges means that the price of the crypto asset has a better chance of growth. The less ETH available on exchanges, the higher the probability of a price increase,” Febrero said.
On January 22, investors withdrew 659,000 ETH from crypto exchanges. CEO and founder of NuggetsNews.com.au, Alex Saunders, says this ETH outflow may be the biggest of a single day.
Largest ETH withdrawal ever?, In a single hour, 659 thousand ETH left exchanges.
Saunders says, it is likely that Ethereum investors have moved their ETH to offline wallets, DeFi platforms, or staking in ETH 2.0. This shows that ETH investors are optimistic about the future of the digital asset.
– Alex Saunders 🇦🇺 (@AlexSaundersAU) January 23, 2021
If the king of cryptocurrencies stays in the 30–32k range, it will provide the stable environment needed for Ethereum to thrive, and possibly approach $1,500 or even $2,000.
Most likely, the bullish momentum of Ethereum will continue till February 8, when the CME group will launch ETH futures contracts for institutional investors.