Amount of Ethereum (ETH) on crypto exchanges drops to lowest level in two years, how bullish is this?

Amount of Ethereum ETH on crypto exchanges drops to lowest level in two years how bullish is this

The total amount of ethereum (ETH) on (central) cryptocurrency exchanges has fallen to its lowest since June 2019. Bloqport reports based on data from Glassnode shortly before the weekend:

The amount of ether on crypto exchanges has declined by about 32% since July 2020 from 19 million ETH to less than 13 million. In the same time, we saw the price rise as much as 1,600% from around $250 to an all-time high (ATH) of $4,350. That was already a month ago and ether has since fallen by about 35%.

Still, the decline in the amount of ether on exchanges shows a bullish picture, because a declining supply is usually accompanied by an increasing price. Much of this is being pinned down for Ethereum 2.0. According to data from Etherscan, there is now a staggering 5.3 million ETH worth $15 billion in ETH 2.0’s deposit contract.

The massive crash last month suddenly brought an end to the huge rally of the ether price. Ether is now starting to outperform bitcoin again, which may indicate that it is still altcoin season:

Lately, Ethereum has received a lot of criticism about the high transaction costs on the blockchain network. These costs have now returned to the level at the beginning of this year and of the decentralized finance (DeFi) summer of 2020:

This summer (if all goes well) Ethereum will introduce EIP-1559 which will make the supply of ether deflationary. This means that the existing supply will probably decrease even faster.

This high transaction cost is also one of the reasons why Polygon (MATIC) has performed so well in recent times. Polygon is a scaling solution for Ethereum that makes transactions more efficient and is also known as “Polkadot on Ethereum”.