Metrics

Ethereum Exchange Supply Hits A 20-Month Low

Ethereum, as the world’s second-largest cryptocurrency by market cap, is going through an interesting time. Its value is pushing toward a new all-time high, and the exchange supply keeps decreasing. More specifically, the exchange net flow is dropping quickly, reducing the available supply on exchanges somewhat. 

Will We See An Ethereum Supply Shortage?

Bitcoiners expect the available BTC supply on exchanges to keep dwindling for the foreseeable future. As the supply on exchanges keeps decreasing, the price is bound to head in the opposite direction sooner or later. However, there is still more than enough BTC on centralized trading platforms today to make any real difference.

For Ethereum, that situation becomes rather similar. It, too, has an exchange supply that keeps dwindling. More specifically, a 20-month low has been recorded as of today. One has to keep in mind this low still represents over 14.25 million ETH on exchanges. That represents well over 10% of the circulating supply, making it less of a “shortage”. 

Source: Glassnode

It is worth noting the Ethereum supply on exchanges hit an all-time high of nearly 19 million ETH in late 2020. Ever since the price began moving toward $2,000 and beyond, that supply has gone down steadily. Keeping this momentum going may push the available supply below 14 million eventually. The bigger question is when this will begin impacting the price, as that isn’t necessarily the case just yet.

Ethereum Net Flow Goes In The Red

Figuring out the reason for this decrease in supply on exchanges is not complicated. Looking at the Ethereum exchange net flow, the downtrend becomes more outspoken. It doesn’t often happen to see such a steep deficit between exchanges and withdrawals for ETH. A negative net flow of over $34 million is interesting, although not necessarily abnormal.

Source: Glassnode

To put this into normal numbers, there is a negative net flow of 16,103 Ether. It represents a one-month low, potentially indicating fewer people are willing to keep Ethereum on exchanges for more extended periods. Making a meaningful difference for this metric will require a more significant negative netflow, however. 

As the Ethereum price continues to hover near $2,120, these metrics may not make too much of an impact right away. Pushing toward a new all-time high should not prove too challenging, Even so, one has to wonder how high the price can go in the coming days and weeks. Some speculators expect values of up to $5,000 per ETH, yett hat may not be too feasible.


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JP Buntinx

JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.

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