In the midst of the ongoing market downtrend, the amount of Ethereum held on cryptocurrency exchanges has dropped to its lowest levels seen in almost a decade. According to the data shared by the analytics firm Santiment, the percentage of ETH on exchanges is now down to 10.1%, its lowest rate since public trading began in 2015. This means that the non-trading holdings have now hit an all-time high.
This downturn in the price of ETH has been blamed on a multitude of factors. One such element is the amount of Ether being sold off in order to pay for the annual transaction fees incurred by miners for the successful extraction of blocks on the Ethereum blockchain. This process, known as ‘mining’, is integral to the functioning of the decentralized platform, but can prove to be extremely expensive as the costs associated with running the process increase exponentially over time. Consequently, miners are often forced to part ways with Ether in order to cover the costs of the transactions on Ethereum’s network.
Furthermore, the Ether market is also believed to be suffering from major exchange inflows. Unlike other major digital assets, the majority of Ether sales occur through centralized exchanges that cater to the crypto-investing crowd. This has created a situation where large amounts of coins are being offloaded into the market by these exchanges causing a steady downward pressure on the overall value of the coin.
Finally, Ethereum has also been hit by the General Data Protection Regulation (GDPR) in Europe. The implementation of the GDPR has put a number of restrictions on data collection, forcing many of the bigger exchanges to make major changes to the way they manage customer funds. This has resulted in a significant drop in the trading activity on these exchanges, thus negatively affecting Ethereum’s chances of recovery in the near future.
In the grand scheme of things, however, the decreased amount of Ether held on exchanges is a positive development for the value of the cryptocurrency in the long run. In an age of rampant volatility and uncertainty, reducing exposure to the markets’ vagaries is often an effective means of maintaining profits and protecting investments. In the end, much of the future prospects of Ethereum will depend on the community’s ability to successfully tackle the multitude of challenges that are currently facing it.
Andrew Watson
- 2023-05-12
Ethereum Exchange Holdings Reach Near Decade Low
The amount of Ethereum held on cryptocurrency exchanges has dropped to its lowest figures since trading began in 2015, due to a multitude of factors, such as miner transaction fees and exchange inflows.
