Ethereum prices showed a significant level of volatility over the past week, vibrating between about $4,260 and $4,490. This price movement is not only a result of market volatility, but it is also a number of attractive underlying factors. Recent chain analysis delves into several factors behind Ethereum’s price action.
Exchange-wide Ethereum Holdings falls in 3 months
In a post on the encrypted platform’s Quick Take, pseudonChain revealed that Ethereum holdings for different centralized exchanges have dropped significantly over the past few months.
Most notably, two of the world’s biggest exchanges by trading volumes, Binance and Coinbase, are the main perpetrators behind this persistent ETH spill trend.
Analysts say Binance’s holdings fell by about 700,000 ETH within two weeks (August 23 to September 5). Within this same period, US-based Coinbase also recorded a token leak of approximately 900,000 ETH.
CryptoonChain has been higher in the time frame, citing ETH outflows over a span of about two months, resulting in over 2.6 million ether tokens across centralized exchanges. Interestingly, analysts pointed out that there is a clear inverse correlation between ETH exchange holdings and Ethereum market price.
Impact on Ethereum prices
A general increase in spills from exchanges, Coinbase and Vinance in particular, suggests a continuous accumulation of Ethereum tokens. Typically, exchange outflows indicate that investors are moving assets from exchange addresses to non-adjusted wallets.
Source: CryptoQuant
Essentially, this trend indicates that investors are no longer trying to sell Ethereum tokens, but rather that they will retain them in the long term. The previous inverse correlation between Ethereum Exchange Holdings and ETH prices supports this guess.
If there is a significant withdrawal of digital assets from the exchange address to the holder wallet, a phenomenon known as a supply shock may continue. In the context, a supply shock or supply crunch refers to a decrease in the amount of assets available in the open market, leading to a rise in prices.
Related Reading: Stablecoin Exchange Liquidity Hit Records $68 billion, Holds 67% on Binance alone
In light of this, CryptoonChain repeated this basic economic principle, saying that a sustained decline in ETH supply on this exchange could lead to a rise in prices, especially if investor demand remains or increases.
At the time of writing, Ethereum priced around $4,276, reflecting a nearly 1% decline over the past 24 hours. According to Coingecko data, the second-largest cryptocurrency has dropped by more than 2% in the past seven days.
The price of ETH on the daily timeframe | Source: ETHUSDT chart on TradingView
ISTOCK featured images, TradingView chart
Editing process Bitconists focus on delivering thorough research, accurate and unbiased content. We support strict sourcing standards, and each page receives a hard-working review by a team of top technology experts and veteran editors. This process ensures the integrity, relevance and value of your readers’ content.
