2023-05-27 18:46:00
The rate of ETH stored on crypto exchanges has just reached the support from July 2016Ethereum holders shun centralized platforms.
An increase in Ethereum staking, holders abandon exchanges
Since April 12, 2023, more than 4,4 millions d’ETH have been deposited in staking contractsbringing their total number to 22.58 million according to data collected by Glassnode.
This follows the implementation of the update “Shapella” on the Ethereum network.
We have already witnessed an increase in staking on Ethereum during the implementation of the Beacon chain of Ethereum in December 2020. However, this staking which prohibited the holder from withdrawing their cryptocurrency repelled some investors.
Since the transition to Proof of Stake (Proof of Stake), the ecosystem led by Vitalik Buterin is supposed to make possible theunstakingthat is to say the withdrawal of ETH staked. If this was not fully achieved during “The Merge”, the upgrade Shapella will allow holders to withdraw their staking tokens.
The risk associated with staking has therefore significantly decreases; holders can withdraw at their discretion.
Since “Shapella”, ETH holders seem to be gradually abandoning the exchanges. As an analyst from Bitfinex reminds us, holders would now seem focus on passive income generated by the staking of their ethers when they are liquidated:
“The increase in demand for staking is likely coming from large Ether holders, who prefer not to liquidate their assets and instead seek to generate passive income.”
According to the same analyst, this trend should continue, he adds:
“This trend is likely to continue, especially as deflationary forces are expected to propel the price of Ether significantly”
A historic low
According to the data available on Glassnodethe rate of ETH stored on cryptocurrency exchanges is 14,85% – data for Tuesday, May 23. Concretely, the wallets belonging to the exchanges hold 14.85% of the ethers in circulation.
This constitutes a drastic drop in the level reached during the bull market of 2021a period during which the exchanges held between 25% and 26% of the ethers.
Note that a low ETH rate on exchanges is a sign ofmarket optimism. Staking involves the investor confidence: they decide to place their tokens, they no longer speculate on the price. The main consequence of this phenomenon: the reduction in the number of ETH in circulation which will certainly result in a upward pressure on prices.
A macro context that does not help exchanges
The flight of ETH holders to staking goes hand in hand with the general loss of pace of exchanges. Binance, the largest crypto exchange in the world, recorded a 48% drop in trading volume for the second consecutive month in April. At $287 billion, it is the second lowest level since 2021. Over the same period, the crypto-exchange sector experienced a more general decrease of 40%.
Finally, note that crypto exchanges are currently marked by uncertainties related to the macro-economic situation. Inflation, banks in difficulty or even rising interest rates do not seem to make cryptocurrency investors want to join centralized platforms but rather to join others. alternatives like staking.
Source : CoinDesk
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