Recent on-chain data indicates that Ethereum has experienced a significant outflow of funds from exchanges, suggesting that buying activity may be occurring in the market.
Ethereum Exchange Supply Hits Lowest In 5.5 Years After $181 Million Outflow
Data from on-chain analytics firm Santiment reveals that ETH has witnessed its largest exchange outflow since August 21st. The key metric to focus on here is the “supply on exchanges,” which tracks the total amount of Ethereum held in centralized exchange wallets.
A decrease in the value of this metric indicates that more coins are being withdrawn from exchanges. Typically, investors move their coins to self-custodial wallets when they plan to hold them for extended periods. This trend could suggest that HODLing (holding onto assets) is happening in the market.
Conversely, an increase in the indicator suggests that deposits are flowing into exchanges. Investors might transfer funds for various reasons, including selling, so this trend can sometimes signal an upcoming price correction.
The counterpart to the supply on exchanges is the “supply outside of exchanges,” which measures the total amount of Ethereum stored in self-custodial wallets.
Take a look at the chart below, which illustrates the Ethereum supply on exchanges and the supply outside of exchanges over the past few months:
The graph above reveals a recent sharp decline in the Ethereum supply on exchanges due to a significant outflow on these platforms. Simultaneously, there has been an increase in supply outside of exchanges as assets are transferred to self-custodial wallets.
During these recent withdrawals, investors moved 110,000 ETH (equivalent to approximately $181 million) to self-custodial entities, resulting in the supply on exchanges reaching its lowest point since May 2018.
These outflows have occurred following a price pullback after Ethereum crossed the $1,700 mark. Consequently, these withdrawals may indicate a net increase in buying activity at current prices.
It is worth noting that the supply outside of exchanges has shown consistent growth regardless of the behavior of the supply on exchanges. This is primarily because new ETH is continuously minted as validator rewards. As this freshly minted supply is held in self-custody, it logically contributes to the overall growth of the supply outside of exchanges.
ETH Price
Ethereum has been consolidating near the $1,600 level since a failed recovery attempt a few days ago.
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