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Ethereum Balances on Exchanges Reach New Low, While ETH Holders Surge: Insights into Liquidity Trends

In recent weeks, a notable decline in the influx of Ethereum onto exchanges has been observed, with new data shedding light on the decreasing balance of Ethereum held on these platforms. The latest chart analysis from Glassnode Alerts has revealed that Ethereum’s current balance on exchanges has reached a new nadir, signaling a decline in overall liquidity within these trading platforms.

According to the data provided by Glassnode, the current balance of ETH on exchanges is approximately 17.2 million, marking the lowest point observed in the past five years. This figure is significantly lower compared to January when the balance on exchanges exceeded 19 million, and even May when it surpassed 18 million. This downward trend indicates a reduction in available liquidity within exchanges.

However, it is important to note that a decrease in ETH on exchanges does not necessarily mean a decrease in the number of ETH holders. Despite the apparent outflow of Ethereum from exchanges, there has been a steady increase in the number of ETH holders, as highlighted by the Santiment chart. Currently, there are approximately 100 million individuals holding varying amounts of ETH, with around 98.4 million reported at the end of April.

This decline in Ethereum balances on exchanges, coupled with the growth in the number of holders, can be attributed to two primary factors: self-custody and staking. More individuals are opting for self-custody, which involves holding their ETH in personal wallets rather than leaving them on centralized exchanges. This approach provides users with greater control and security over their assets.

Additionally, staking has gained popularity, whereby users lock up a certain amount of Ethereum to participate in the network’s proof-of-stake consensus mechanism. Stakers receive rewards in the form of additional ETH for securing the network, which incentivizes users to hold their ETH in staking contracts rather than on exchanges. Currently, there are over 780,000 ETH deposits for staking, and this number continues to grow.

Despite the decrease in Ethereum on exchanges, the Ethereum ecosystem continues to thrive. Data from DefiLlama reveals that Ethereum’s dominance in terms of Total Value Locked (TVL) remains strong, with a TVL of approximately $27.35 billion, accounting for over half of the overall TVL. This influx of liquidity highlights the ongoing relevance and significance of ETH.

Furthermore, CoinMarketCap data indicates that ETH maintains its position as the second-largest cryptocurrency by market capitalization, trailing behind Bitcoin. In the last 24 hours, ETH boasted the third-highest trading volume, contributing over $3 billion to the total trading volume of the cryptocurrency market, which surpassed $19 billion.

As of the time of writing, Ethereum is trading at approximately $1,900, further reinforcing its position as a prominent digital asset within the market.

The recent decline in Ethereum balances on exchanges indicates a decrease in overall liquidity, but it is accompanied by a surge in the number of ETH holders. The shift towards self-custody and the growing popularity of staking are significant factors contributing to these trends. Despite the decrease in balances on exchanges, Ethereum remains dominant in terms of Total Value Locked and trading volume, underscoring its ongoing relevance and importance within the cryptocurrency ecosystem.

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