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On-chain data shows that the Ethereum exchange supply ratio has continued to move steadily around the 2016 lows, a potentially bullish sign for ETH.
The Ethereum exchange supply ratio has recently reached its lowest levels
In CryptoQuant Quicktake mailone analyst spoke about the recent trend in the Ethereum exchange supply ratio. the “Exchange width ratio“It is an on-chain metric that tracks the ratio between the exchange reserve of ETH and the total circulating supply.
the “Exchange reserve“Here refers to a measure of the total amount of cryptocurrency currently held in wallets connected to centralized exchanges.
When the value of this indicator rises, it means that investors are depositing their coins on exchanges. Since one of the main reasons why owners move to these platforms is for selling-related purposes, this type of trend can have a downward impact on the price of the asset.
On the other hand, a measure that records a decline indicates a net amount of supply leaving the exchanges. Generally, investors withdraw their coins into self-custodial wallets when they plan to hold them for the long term, so this could turn out to be a bullish trend for ETH.
Now, here is the chart shared by Quantity that shows the trend in Ethereum exchange supply ratio over the past decade:
The value of the metric appears to have been stale in recent months | Source: CryptoQuant
As shown in the chart above, Ethereum’s exchange supply peaked in 2020. During this surge, exchanges held more than 30% of the total circulating supply of the asset.
But since then, the index has been steadily declining, despite the rise in the asset’s supply. This means that investors have withdrawn coins at a rate exceeding the expansion in supply.
This year, the gauge fell to a sideways movement, indicating that equilibrium has been reached in this sector. It is interesting that this fixed measure has come about though High prices Which Ethereum was enjoying.
Naturally, this trend indicates that many cryptocurrency investors are not ready to give up on it just yet. At the same time, though, consistent accumulation isn’t happening like before, so it’s not as if there aren’t any sellers at all.
However, the fact that the index has at least remained in balance throughout this rally could be a positive sign of its sustainability. The measure can now be to watch the future, just to make sure the trend continues.
Any reversals to the upside will of course indicate that investors have begun to sell, which could mean that Ethereum’s uptrend may be nearing its peak.
Bitcoin price
At the time of writing, Ethereum is trading at around $3,600, up more than 9% over the past week.
Looks like the price of the coin has been moving up over the last few days | Source: ETHUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart from TradingView.com
