The supply of Ethereum, the second-largest cryptocurrency in the world by market value, continues to see a reduction in supply as the most recent Shanghai upgrade develops. Interestingly, the deflationary digital asset's total supply had decreased by more over 66,000 ETH since the beginning of 2023.
According to the most recent information provided on March 28 by on-chain analytics firm Santiment, just 10.31% of existing ETH is now available on exchanges, which is the lowest amount since July 2015. Since regulators continue to struggle to define ETH as a security or commodity, over 90% of Ethereum is now off exchanges.
“This essential all-time low ratio of ETH on exchanges (10.31%) indicates confidence from hodlers.”
Due to an increasing trend among investors to keep their tokens in personal wallets rather than leave them on cryptocurrency exchanges, self-custody of Ethereum has increased. The urge for investors to have complete control over their assets and growing worries about the security of exchanges like FTX have both contributed to this change in behavior.
The development of decentralized finance protocols based on the Ethereum blockchain is another factor driving the trend. Users may trade, lend, and borrow crypto using DeFi protocols without the use of middlemen like banks. Due to investors' desire to take part in these novel new financial products, this has resulted in an increase in demand for Ethereum.
As a result, a lot of investors are beginning to consider Ethereum as a possible long-term investment vehicle, similar to Bitcoin. The increased confidence of hodlers, who hold onto their Ether for the long term rather than trading it on cryptocurrency exchanges, is evidence of this.
In addition to the rise in self-custody, the low percentage of ETH on exchanges points to a strong purchasing trend. The quantity of Ethereum on exchanges is decreasing as a result of hodlers' ongoing accumulation, which raises the price of the cryptocurrency.
This trend is expected to continue as long as investors maintain their tokens in their own possession, and Ethereum will probably keep discovering new use cases. ETH is now valued at $1,739, up 1.71% over the past day, and has a $213 billion market cap.
