According to on-chain crypto analyst IntoTheBlock, over $1.2 billion worth of Ethereum (ETH) has been withdrawn from major cryptocurrency exchanges, which is a new record amount. This has led to speculations regarding an ETH supply squeeze. Let us dive further into this interesting development and see if such a move is imminent in the near future.
According to IntoTheBlock, the amount of ETH leaving cryptocurrency exchanges is near all-time highs. The $1.2 billion worth of ETH in question was pulled out of the centralized exchanges on Thursday alone. While this amount is very small compared to the overall market capitalization of the cryptocurrency, it still shows us that if this much can be moved in a matter of just one day, how a possible future jailbreak from the exchange wallets is gonna do for the cryptocurrency in the near future.
Furthermore, according to IntoTheBlock, ETH rose more than 60% within a matter of 30 days after it was reported that over $1 billion worth of crypto was pulled out of exchanges back in early April. While this doesn’t necessarily mean that every big move of ETH outside the exchange wallets results in a big price rally, it does show some correlation between the two.
Ethereum has also become a practically deflationary asset after the recent London hard fork. The move envisages a slowly constricting supply for the cryptocurrency and as such that approximately 309,510 ETH or over $1.1 billion equivalent has been burned by the network automatically after just 42 days of the London hard fork. That comes to be around 5.05 ETH per minute or over $26 million on a daily basis.
The deflationary mechanism alone isn’t enough to make a bullish case for the cryptocurrency but now, with more and more ETH flowing out of exchange wallets, it is expected that the digital asset will see some price appreciation in the near future. The widespread use of the network by other applications including those in the Non Fungible Token (NFT) sector and the Decentralized Finance (DeFi) has been another factor in drumming up further interest in the digital asset.
However, long-term price stability of the second largest cryptocurrency is still in question. Some crypto purists believe that Ethereum is overly centralized and moves too fast in a top-bottom approach. This is why the programmable blockchain may face difficulties holding on to any gains made in the short-term due to self-induced supply squeezes. But for now, Ethereum as well as Bitcoin is seeing massive amounts flying away from exchanges. This may result in a massive supply squeeze and boost the relative price indices.
Image Source: pixabay.com
Don’t worry, we hate spam too
one weekly digest, just the important stuff.
How about some social? Follow us on Twitter!