Ethereum Balances on Centralized Exchanges Hit Lowest Levels Since 2016, Indicating Potential Price Implications
Main Idea
Ethereum balances on centralized exchanges have dropped to their lowest level since July 2016, suggesting a potential price increase due to reduced supply and increased on-chain yield strategies.
Key Points
1. Ethereum balances on centralized exchanges (CEXs) have decreased by 6.7% in Q3 2021, reaching the lowest level since July 2016.
2. The decline in ETH supply on CEXs is attributed to increased adoption of on-chain yield strategies, staking, and treasury programs.
3. Michael Nadeau of The DeFi Report describes this as an ETH 'supply shock,' which could tighten liquidity and drive price increases.
4. The reduced sellable supply on exchanges may lead to a 'reflexivity effect,' where market activity and price trends reinforce each other.
5. Historical trends indicate that lower ETH balances on CEXs correlate with potential price appreciation due to constrained supply.
Description
Ethereum balances on centralized exchanges have reached their lowest level since July 2016, decreasing by 6.7% in Q3 2021, suggesting a potential price increase due to reduced supply. Ethereum balances
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