ETH’s balance sheet is now at its lowest level in 23 months, according to Glassnode. The last time approximately such a volume of cryptocurrency placed on trading floors was observed in June 2019. Researchers found that users currently hold $ 52.4 billion in air on exchanges, or 11.5% of the total altcoin supply.
Thus, investors were gradually withdrawing ether from exchanges. The balance of this cryptocurrency on trading platforms has decreased by about 30%.
Moreover, the number of large organizations holding large amounts of Ethereum is gradually decreasing.
The most likely reason for this is that large players either fix profits or massively withdraw ETH from exchanges to participate in DeFi protocols. Another option is the usual withdrawal of coins to cold wallets for long-term storage.
The most recent version of the above is the use of ETH in decentralized protocols. Indeed, the volume of Ether in DeFi protocols is growing.
Almost 23% of the supply, or 26 million ETH, is now in the DeFi segment and on various smart contracts.
For some time, ETH volumes on exchanges and in DeFi protocols remained stable, but a split began in January. Currently, almost twice as much ETH blocked in smart contacts as on centralized platforms.
Bitcoin owners convert them into Ether
The analysis also showed that in May, long-term owners of Bitcoin are actively converting them into Ether. Glassnode claims that once purchased, tokens mostly moved to cold wallets or reserved in decentralized funding protocols to generate passive income.
At the same time, the reduction in supply has a positive effect on price dynamics. This trend increases the pressure of buyers in the market and contributes to the rise in prices.
The company’s analysts also draw attention to a noticeable increase in activity on the Ethereum network against the background of the recent increase in the price of ETH to $ 4,200. Over the past week, altcoin has grown by almost 16%, growth over the month was 85%. While Ethereum’s price is just under $ 3,900 at the time of writing, down from its recent all-time high of $ 4,220.
As a reminder, according to recent estimates by CoinShares, institutional investors have invested over $ 57 billion in cryptocurrency.
DeFi and cold storage
Of the 10 million ETH locked on DeFi, about 6.6 million are currently in the protocols of market makers such as Maker, Aave, and Compound. This means that they are used as collateral and do not participate in active trading.
Another 2.4 million ETH are used by automated market makers in trading pairs. The rest of ETH is stored in smart contract wallets or cold storage, the most popular of which is Gnosis Safe. There is now 1.8 million ETH there.
Thus, we can conclude that the use of ETH stimulates demand and returns to the hands of holders, and not to centralized exchanges.