Quick take:
- The percentage of Ethereum being held on crypto exchange is at 13.35% of the total supply in circulation
- This value is the lowest since November 23rd, 2018
- DeFi and preparation for ETH2.0 staking could be two reasons why this is so
- It could also indicate that whales are least likely to dump their ETH, at least in the short term
The amount of Ethereum (ETH) held on crypto exchanges is currently at 13.35% of the total circulation supply. This is according to on-chain data by the team at Santiment who also pointed out that this is the lowest it has been since November 23rd, 2018. Such a low percentage of Ethereum on crypto exchanges could signify investor confidence by ETH holders on the long term value of the digital asset. The team at Santiment shared this information via the following tweet.
1) 🙂 The percentage of total $ETH being held on exchanges today (13.35%) has not been this low since November 23, 2018. The almost exact two-year milestone is a positive sign for #Ethereum holders, who have historically benefited when supply held off of pic.twitter.com/r7waudgPdo
— Santiment (@santimentfeed) November 13, 2020
Probability of Whales Dumping their ETH is Low at Least for the Short Term
Furthermore, the team at Santiment was quick to point out that such a low percentage of ETH on exchanges could also mean that whales will not sell their bags at least for the short term. Sell-offs usually occur when this value is above $15%.
It indicates that large whale selloff probabilities will remain limited…if $ETH‘s % of supply on exchanges creeps over 15%, which historically indicates downside movement
DeFi and ETH2.0 Could Be Reasons why ETH on Exchanges is Low
As mentioned above, the low percentage of ETH on exchanges is particularly bullish for Ethereum holders. This could mean that Ethereum investors are storing their ETH safely offline in anticipation of the launch of ETH2.0 which could very much send the price of Ethereum to new heights.
Additionally, some could be making good use of their idle ETH by locking the funds in the various DeFi platforms. A quick look at DeFiPulse.com reveals that a total of 8.9 Million Ethereum is locked on DeFi platforms. This is approximately 7.84% of the total circulating supply of 113.4 Million ETH.
Conclusion
Summing it up, fewer and fewer Ethereum investors are storing their ETH on crypto exchanges. This fact is particularly bullish as it points towards less selling pressure for Ethereum at least in the short term.
Those opting to store their Ethereum outside exchanges could be doing so in anticipation of the launch of ETH2.0 which kicks off on December 1st. This event should usher in a period of transition for Ethereum to a Proof-of-stake network. There could be also a huge percentage of Ethereum investors who are using their ETH to capitalize on yield farming on the various DeFi protocols.