Ethereum Supply Shock Grows As Reserves Decrease, ETH 2.0 Contract Increases

Keshav Verma

3 years ago

3 mins read

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The Ethereum supply shock has been growing as exchange reserves continue to decrease and value staked in ETH 2.0 contract rises.

Ethereum Supply Shock: Exchange Reserves Go On Decreasing While ETH 2.0 Staking Contract Grows In Value

As pointed out by a CryptoQuant post, ETH exchange reserves have been decreasing while the coins locked in the staking contract have been rising.

The “all exchanges reserve” is an Ethereum indicator that highlights the total number of coins stored in wallets of all exchanges.

When the value of this metric goes up, it means there is an increase in the supply of ETH on exchanges. Such a trend may show that there is a selling pressure in the market as investors are sending these coins to exchanges for withdrawing to fiat or altcoin purchasing.

A decrease, on the other hand, would imply the supply of ETH is going down as investors take their crypto off exchanges for hodling or selling through OTC deals. This behavior may show that buyers feel bullish on the coin’s future.

Now, here is a chart that shows the trend in the all exchanges reserve for ETH:

The indicator's value looks to be decreasing while ETH 2.0 total value staked is moving up | Source: CryptoQuant

As the above graph shows, the Ethereum exchange reserves have been steadily heading downwards since quite some time now.

This is despite ETH’s recent sharp increase in price. It seems investors are willing to hold on as they believe the price will appreciate even further.

This is creating a supply shock in the market. An increase in demand from big whales like institutional and retail investors now can blow the price up.

In fact, on-chain data suggests institutional investors have already started getting involved in the crypto as 400k ETH exited the crypto exchange Coinbase a few days back.

By the way, the chart from before also includes the value currently staked in ETH 2.0. As this contract is seeing a steady increase in the number of coins being locked, it looks likely that some of the supply going off exchanges is going into this contract. This further backs the idea that investors are in Ethereum for the long term.

ETH Price

At the time of writing, Ethereum’s price floats around $3.8k, up 5% in the last seven days. Over the past month, the crypto has gained 9% in value.

The below chart shows the trend in the value of the coin over the last five days.

ETH's price has moved rather sideways in the last few days | Source: ETHUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

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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