Ethereum holders might be elated to know this about exchange balance
The beginning of the year ushered in a whirlwind of events that significantly influenced the crypto industry, with Ethereum being (ETH) no exception.
The current state of affairs, including the SEC’s regulatory crackdown and potential bank runs, has undoubtedly left ETH holders feeling disillusioned. However, other factors might be responsible for the dwindling ETH exchange balance.
Read Ethereum [ETH] Price Prediction 2023-24
In 2022, the FTX crash sent shockwaves through the crypto world, causing many holders to question the safety of keeping their assets on exchanges.
The incident sparked a renewed interest in self-custody to secure crypto holdings. However, while Ethereum experienced a decrease in exchange balances in the months following the crash, this trend can be attributed to other factors beyond fear of exchange insecurity.
According to a recent Glassnode chart from Glassnode alerts, the balance of Ethereum held on exchanges has been steadily decreasing.
As of this writing, the exchange balance had reached a five-year low, hovering just above $18 million. This trend indicates that more ETH holders are opting for alternative storage methods rather than leaving their assets on exchanges.
Source: Glassnode
In addition, a closer examination of Ethereum’s exchange netflow reveals that the outflow of ETH from exchanges has exceeded the inflow, with few exceptions of inflow spikes.
Currently, the netflow of ETH on exchanges remains negative, with outflow continuing to dominate. At the time of writing, the netflow had surpassed 11,000 ETH already, highlighting the ongoing trend of ETH holders moving their assets away from exchanges.
Source: CryptoQuant
One possible factor is the rise of decentralized finance (DeFi)
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