On-chain data shows that the percentage of Ethereum supply present on exchanges has set new lows of around 14%.
Ethereum Supply On Exchanges Continues To Go Down
As pointed out by an analyst in a CryptoQuant post, the ETH supply present on exchanges has been going down since a while now. It has now hit new lows of about 14%.
The “percentage supply on exchanges” is an indicator that shows the share of the total Ethereum supply stored in wallets of all exchanges.
Usually, this supply present on exchanges is said to be the selling supply of ETH, and so if the indicator’s value goes up, it means there is a higher number of coins in the available sell supply.
Due to supply-demand dynamics of the market, this kind of trend can prove to be bearish for the cryptocurrency’s price.
On the other hand, if the metric’s value moves down, it implies the available supply of Ethereum has reduced. Prolonged such trend can create a supply shock in the market, which can turn out to be bullish for the coin’s price.
Related Reading | Exchanges See Bitcoin Outflows For 7th Straight Day As BTC Price Begins Recovery
Now, here is a chart that shows the trend in the percentage of total ETH supply on exchanges in the past year:
Looks like the indicator's value has been gradually going down | Source: CryptoQuant
As you can see in the above graph, the percent ETH supply on exchanges has shown a steady downtrend during the entire year so far.
Currently, the value of the indicator sits around 14%, a new low. At the start of the year, the metric’s value was about 21% so that in the past year 7% of ETH supply has been taken off exchanges.
Related Reading | Ethereum Scarcity: After London Fork, ETH’s Supply Change Drops To Almost Zero
Also, back in May, when the price of Ethereum was at similar levels as now, the metric’s value was around 18%, a sizeable difference. Because of this the analyst believes that the current supply shock isn’t fully reflected in the price yet. And that it won’t be long until a difference is seen.
At the time of writing, Ethereum’s price floats around $4.6k, up 10% in the last seven days. Over the past month, the crypto has gained 5% in value.
The below chart shows the trend in the price of the coin over the last five days.
ETH's price looks to be recovering from the crash | Source: ETHUSD on TradingView
A few days back, Ethereum and the wider market had a crash due to fud from the latest COVID variant. However, ETH looks to have already recovered from it.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com