In the last year, 25% of the total Ethereum (ETH) offer has been withdrawn from exchanges.
ETH 6 million withdrawn from exchanges, speculation or opportunity?
In January 2021, there were more than 24 million ethers on all monitored exchanges. Since then, however, there has been a gradual and permanent decline, to 18 million ETH, which are on stock exchanges such as Coinbase or Kraken.
It may only be speculation, but it could also be that the rise of decentralized finance has increased opportunities for holders of the second largest cryptocurrency. The amount of ETH in DeFi followed the price in the summer, with about 2 million ETH added from March to April.
So what we can see is not the correlation with the price, but the inverse correlation with the graph of the amount of ETH in DeFi below.
Supply on exchanges is steadily declining and has already fallen by ETH 6 million, while the offer in DeFi is constantly increasing to now 7.4 million ETH worth $ 26.4 billion.
This suggests that a kind of parallel universe is being built, not as before, when the cryptocurrency was converted to dollars. It is now a matter of transferring the cryptocurrency to the collateralization platform and then yielding it. There is no interaction with dollars at all, although you can get dollars as compensation for the risk you are taking, and if the price is against you, then you have to repay everything you borrowed or sell some of your ETH.
Because these protocols need some assets to operate, resources remain in this parallel universe and remain in cryptocurrencies. This means that 7 million ETH has been effectively withdrawn from circulation. In Bitcoin case are 200,000 BTC, or $ 11 billion.
Also, ETH 8 million worth $ 28 billion is now in deposit smart contract that are out of circulation because you can’t move them until after the merger. Then more than half a million ETH is burned and it will continue to burn. This makes up about 20% of Ethereum’s total supply, which has been virtually withdrawn from circulation.
This is a supply crisis that the second largest cryptocurrency has ever seen. However, Defi brings new opportunities. So cryptocurrency exchanges are now more for entry than for exit, because once you’re inside, there’s a lot you can do without having to go.