Since the start of the year, Ethereum's reserves held on exchanges have fallen by 26%. During the same period, the price of ETH exploded. And traders expect more.

Among the two main cryptocurrencies, it is no longer Bitcoin that sets the pace in the market. Ether achieves record performance. Over a year, its price has soared by no less than 700%. It climbs from 400 to more than 3,000 dollars.

Before crypto values ​​fell in mid-May, ETH even exceeded $ 4,000. Will the native Ethereum blockchain token be able to afford a foray beyond this threshold again in 2021? Many traders hope so.

Featured Crypto Ether of August

The inflation of the price of Ether indeed encourages investors to hold on to their tokens pending a further rise. An indicator is used to measure it: the number of Ether kept on the exchanges.

For short-term trading purposes, traders generally keep their cryptocurrencies on exchanges. However, these reserves available on the crypto exchanges drop sharply in 2021.

According to CryptoQuant, these reserves drop over one year from 26.29 to 19.22 million Ether. Clearly, holding strategies take precedence over short-term trading. And in the year 2021 alone, these token stocks are melting by 26%.

So fewer reserves, but also fewer deposits, which further supports the Ether hold hypothesis. According to CoinMetrics, ETH deposits made by investors on trading platforms are down 21.11% year on year.

And this trend has intensified further over the past 30 days. This therefore coincides with the deployment of the hard fork London. The update has the effect of burning tokens, previously returned to miners in the form of fees.

Staking and London reduce Ether supply

This burn mechanism thus generates deflationary pressure. Indeed, during the 20 days following the activation of London, the network burned nearly 92,595 ETH, or the equivalent of 295.85 million dollars.

London is therefore helping to reduce the supply of ETH on the market, thereby theoretically promoting a rise in the price of Ether. However, over a month, deposits made with exchanges plummeted by 47.81%.

This trend sends a clear signal: investors decide to hold their cryptocurrencies on their own wallets, betting on a rise in the price of ETH. For now, Ether is going through a consolidation phase around $ 3,000, after rising rapidly.

Another mechanism that helps to reduce the supply of Ether still is staking on Ethereum 2.0. As part of the migration to Proof of Stake, token holders can deposit their Ether on a dedicated smart contract for staking. The success in this area is undeniable with nearly 7 million ETH in staking.


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