Ethereum Bullsh Signal: Supply On Exchanges Continues To Hit New All-Time Lows

Keshav Verma

2 years ago

3 mins read

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On-chain data shows the Ethereum supply on exchanges has continued to drop lower recently, a sign that could be bullish for the asset.

Ethereum Supply On Exchanges Has Gone Down Recently

According to data from the on-chain analytics firm Santiment, supply has continued to leave exchanges recently. The relevant indicator here is the “supply on exchanges,” which measures the total percentage of the Ethereum supply that’s sitting in the wallets of all centralized exchanges.

When the value of this metric increases, it means that a net number of coins is entering the supply of these platforms. As one of the main reasons why investors might want to deposit their ETH to the exchanges is for selling-related purposes, this kind of trend can have a bearish effect on the asset’s value.

On the other hand, decreasing values of the indicator imply the holders are withdrawing their coins from these platforms right now. Such a trend, when prolonged, may be a hint that the investors are accumulating currently, and hence, can be bullish for the cryptocurrency.

Now, here is a chart that shows the trend in the Ethereum supply on exchanges over the last few months:

The value of the metric seems to have been going down in recent days | Source: Santiment on Twitter

As displayed in the above graph, the Ethereum supply on exchanges has been in a downtrend during the last few weeks, implying that investors have been constantly taking out their coins from these platforms.

When these withdrawals started, the indicator had reached what was essentially an all-time low (the only time the metric’s value was lower was way back during the first week of the asset going live for public trading).

As the holders have continued to transfer their ETH out of the exchanges, new all-time lows in the metric have continued to be hit. Interestingly, even after the latest sharp rally in the Ethereum price has occurred, the metric hasn’t deviated from its downward trajectory.

Usually, during rapid increases in the asset’s value, the supply on exchanges tends to go up as some investors look to take advantage of the profit-taking opportunity.

Since the indicator has only continued to go down further recently, it’s possible that even if there is some selling going on, there is also enough buying going to make up for it.

In the chart, Santiment has also included the data for the “average fees,” an indicator that measures the average amount of fees that investors are attaching to their Ethereum transactions currently.

From the graph, it’s visible that this metric has been relatively low recently. It would appear that even though the rally has taken place, the network activity hasn’t yet exploded, as the fees generally shoot up when there is a high amount of traffic on the blockchain.

The analytics firm notes, however, that this setup is quite similar to that observed back in March, following which Ethereum saw a rapid rise toward the $2,100 level.

ETH Price

At the time of writing, Ethereum is trading around $1,800, up 12% in the last week.

Looks like the value of the asset has seen a sharp surge recently | Source: ETHUSD on TradingView

Featured image from DrawKit Illustrations on Unsplash.com, charts from TradingView.com, Santiment.net

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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