How Will Lower Ethereum Balances on Exchanges Drive ETH Price Up?

Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc)Editor's Note: This article comes from

Babbitt Information (ID: bitcoin8btc)

Babbitt Information (ID: bitcoin8btc)

Research firm Santiment noted that the supply of ether on exchanges is at a 28-month low. Its reserves of ETH account for 20.1% of the total Ethereum supply, and the last time it reached a similar level was in November 2018.

What does this data mean? The chart below shows the relationship between Ethereum supply on exchanges and Ethereum price volatility. From the figure, we can see that the two are negatively correlated, and the rise of ETH in recent months corresponds to the decline of the balance of Ethereum on the exchange.

At press time, Ethereum was trading around $1,800, showing a bearish look on the 24-hour chart. However, after a week of slump, Ethereum turned to an uptrend with a gain of 0.3% in the last hour. If Ethereum can stabilize around $1,800, it will gain more momentum to break above the $1,850 resistance.

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Where is the demand for Ethereum coming from?

Currently, the supply of Ethereum mainly flows into two areas. One is DeFi, and the other is a deposit contract for Ethereum 2.0.

DeFi Pulse data shows that nearly 9.4 million Ethereum are locked in the DeFi protocol. This figure dipped at the end of February, but since March 8, DeFi protocols have absorbed nearly 1.5 million more ETH.

At present, this trend shows no signs of abating, but will continue, because more and more users are participating in the DeFi and NFT boom.

Among the DeFi protocols, MakerDAO, Compound, and Sushiswap hold the most ETH, with 3 million, 1.4 million, and 1.3 million respectively. Followed by Uniswap, Aave, Alpha Homora, and Balancer, but only Uniswap of the latter holds more than 1 million Ethereum.