The Ethereum (ETH) balance on crypto exchanges has reached a new five-year low as investors anticipate massive upside movement in the ETH price. ETH withdrawals from exchanges have been outpacing deposits in 2023, with the balance on exchanges now standing at almost 16 million, a level not recorded since July 2018.
This decline in ETH reserves on exchanges started in mid-2020, but the rate of decrease accelerated in September 2022, as the Ethereum network transitioned to proof-of-stake (PoS) with the Merge upgrade. This year alone, the ETH balance on exchanges has fallen from 18.5 million to 16 million, and it is expected to keep diminishing as the rate of Ethereum staking increases after the recent Shanghai upgrade.
One major factor contributing to the surge in Ethereum staking is the increased amount staked on the Beacon Chain following the Shanghai upgrade. Etherscan data reveals that 22.98 million ETH worth $41 million is currently staked on the Beacon Chain.
So, what does this mean for the future of ETH’s price? Typically, low exchange reserves indicate less selling pressure and bullish momentum. As the supply in the market diminishes, the ETH price is likely to rise. Over the past 24 hours, the cryptocurrency’s price has already seen a 2% increase, currently trading above $1800, with a 24-hour low and high at $1782 and $1817, respectively.
However, it’s not all smooth sailing for ETH. A stable price might be good news for some, but decreased volatility and declining trading volumes after the Shanghai upgrade could hint at a slowdown in interest. This could potentially hinder significant gains, or, in a worst-case scenario, lead to a drop in price if market sentiment begins to shift.
In conclusion, while the low Ethereum balance on exchanges and rising staking activity could propel ETH’s price upward, it is essential to consider other factors such as volatility and trading volumes before making investment decisions. The future of Ethereum’s price remains uncertain under these conditions, as both bullish and bearish scenarios are possible. As always, thorough market research and a cautious approach are recommended for those looking to invest in cryptocurrencies.