When people reduce the number of coins they withdraw from exchanges, there will be more trading liquidity. Such a trend is not abnormal, but it can prove problematic during volatile conditions. Ethereum hit a 20-month low for exchange withdrawals, which has some people on edge.
Ethereum Exchange Withdrawals Drop Off
When cryptocurrency price trends are bullish, people increase their exchange withdrawals. Although a rising price means a faster profit, the sentiment will often shift to long-term holding. During a bear market, that trend is the opposite. More people are eager to sell their coins, even if that means taking a loss. Chasing the dip to buy back in lower can work out well, but it is not a guarantee of success.
For Ethereum, the current exchange withdrawals metric is a bit problematic. Reaching a 20-month low on exchange outflow indicates people are eager to keep their liquidity on trading platforms. Under the current price conditions, that is not entirely abnormal either. There is great volatility, creating multiple scalping opportunities for aggressive traders.
— glassnode alerts (@glassnodealerts) February 21, 2022
However, the 20-month low ensures far more liquidity on these platforms. Liquidity makes it easier for investors to acquire the asset, but it can also keep prices suppressed for more extended periods. Unfortunately, there also appears to be a substantial increase in ETH deposits lately. The past week saw an influx of nearly 381,000 ETH across all major exchanges. That is not a positive sign for those expecting a quick market reversal.
An increase in deposits and a steep decline in exchange withdrawals create an interesting combination. It seems plausible to assume more Ethereum market volatility over the coming days. Despite some promising momentum this morning, things have soured once again. That trend affects Ethereum, but also all other cryptocurrencies. When markets go red, they often do so in tandem, and today is no exception.
Bitcoin Becomes More Scarce On Exchanges
While the Ethereum exchange withdrawals do not look too promising, things are different for Bitcoin. Unlike Ether, BTC has become more scarce on exchanges this past week. An outflow of 4,267 BTC might not seem like much, but it is a positive development. Bitfinex and OKEx noted the most significant outflows, with Kraken and Bitstamp noting an inflow.
However, Bitcoin is as volatile as Ethereum today. That doesn’t necessarily mean things will remain bearish for long, but it appears there is still more than enough liquidity on trading platforms overall. Viewbase reports 6.2% of the BTC supply is on exchanges, a number that has remained somewhat constant for a while now.
CryptoMode produces high quality content for cryptocurrency companies. We have provided brand exposure for dozens of companies to date, and you can be one of them. All of our clients appreciate our value/pricing ratio. Contact us if you have any questions: [email protected] None of the information on this website is investment or financial advice. CryptoMode is not responsible for any financial losses sustained by acting on information provided on this website by its authors or clients. No reviews should be taken at face value, always conduct your research before making financial commitments.