As the cryptocurrency market continues to evolve, market participants are noticing some significant shifts in the way that assets, such as ether (ETH), are held and traded. Data from Glassnode shows that the amount of ether held in wallets owned by centralized exchanges has reached its lowest point since July 2016, accounting for 14.85% of all ether in circulation. The last time we saw this was during the infancy of ether in the summer of 2016.
The dip in centralized exchange holdings is quite a departure from the 2021 bull market when exchange balances made up approximately 25-26% of all available ether. A low exchange balance is typically considered a bullish sign because it indicates that there is a limited supply available for purchase, putting upward pressure on prices.
One of the main reasons for this decrease in exchange holdings is the growing interest in staking among ether holders. With the recent Shapella upgrade to the Ethereum network, staking has become even more popular, as over 4.4 million additional coins have been deposited since the upgrade. Large ether holders are increasingly choosing to generate passive income through staking rather than liquidating their assets.
This trend is expected to continue, especially considering that deflationary forces are anticipated to drive the price of ether higher, according to analysts at Binfinex who previously spoke with CoinDesk. Before the Shapella upgrade, some potential stakeholders may have been hesitant to stake their ether tokens due to concerns about their funds being locked up for an extended period.
However, these shifts in ether holdings and staking popularity are coinciding with a decline in crypto trading volumes across major exchanges like Binance. Binance experienced a 48% drop in spot trading volume for the second consecutive month in April, reaching $287 billion – the second-lowest since 2021, with its market share falling to 46%. This reflects a broader 40% industry-wide decline due to macroeconomic uncertainties and recent bank collapses in the United States.
Despite these declines, there may still be opportunities for growth within the ether ecosystem, as the asset’s price remains resilient. Currently trading at $1,816, ether has risen by 2% according to CoinDesk market data.
As the cryptocurrency market continues to develop and adapt, it will be interesting to see how the landscape changes, with the rise in ether staking and the decline in exchange holdings presenting a unique set of challenges and opportunities for market participants.