April 19, 2024
Latest Cryptocurrency News

Staking Frenzy Drains Ether from Exchanges Bringing It to an All-Time Low Since 2016 

Ether (ETH) holdings on exchanges have reached a level not seen since July 2016 as staking activities absorb available Ether. According to data from Glassnode, as of Thursday, centralized exchanges held only 14.85% of all Ether, marking the lowest level since the early days of Ether in 2016. In contrast, during the bullish market of 2021, the exchange balance stood at approximately 25-26%. Low exchange balances are generally viewed as a positive indicator as they indicate limited ether supply for purchase, thus exerting upward pressure on prices. 

Over the past few weeks, the increasing popularity of staking has contributed to reducing the available supply in the market. The implementation of the Shapella upgrade on the Ethereum network has sparked a surge in ether staking, with over 4.4 million additional coins deposited since the upgrade. Large ether holders are increasingly opting for staking to generate passive income rather than selling their assets. 

Analysts at Binfinex anticipate that this trend will continue, especially considering the deflationary forces expected to drive the price of Ether significantly. Before the upgrade, potential stakeholders may have been hesitant to stake their ether tokens due to concerns about the extended lock-up period. 

These developments occur alongside a significant decline in cryptocurrency trading volumes. Binance, the world’s largest cryptocurrency exchange, experienced a 48% decrease in spot trading volume for the second consecutive month in April, reaching $287 billion, the second-lowest since 2021. This decline reflects a broader 40% industry-wide decrease due to macroeconomic uncertainties and US bank collapses, resulting in Binance’s market share being reduced to 46%. 

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