Bitcoin and Ethereum exchange reserves hit a 4year nadir
Bitcoin and Ethereum user balances have plummeted to levels not witnessed since 2020, according to data from Glassnode. The balances of Bitcoin (BTC) and Ether (ETH) on centralized exchanges have hit a four-year low as investors anticipate higher prices in a bullish market.
The balance of BTC has fallen below 2.3 million coins, valued at approximately $160 billion, while ETH balances have dropped to less than 16 million, totaling less than $59 billion.
The decline in Bitcoin and Ethereum exchange balances can be attributed to a trend that began prior to July 2020, as per Glassnode data. Users have been consistently withdrawing assets from these platforms since the onset of the pandemic, through the previous peak in 2021, during the 2022 Terra-FTX contagion, and even after the approval of spot BTC ETFs.
This four-year trend indicates that crypto users have embraced a bullish long-term perspective, demonstrating confidence in the future appreciation of these assets regardless of market fluctuations.
Following the COVID-19 crisis in 2020, global economies experienced inflation, prompting investors to seek refuge in technologically robust assets. Bitcoin’s finite supply and secure design have solidified its position as an inflation hedge, leading countries like El Salvador to adopt the cryptocurrency as legal tender.
Institutional demand for Bitcoin has been driven by Wall Street giants like BlackRock and Fidelity, who have embraced spot BTC ETFs. Companies such as MicroStrategy, led by Bitcoin advocate Michael Saylor, have also invested billions in the leading digital asset.
As the primary altcoin and second-largest cryptocurrency, Ethereum boasts its own bullish outlook as the predominant alternative to Bitcoin. ETH powers the largest decentralized finance (defi) ecosystem, valued at nearly $70 billion according to DefiLlama.
In 2020, the launch of the Beacon chain marked the commencement of the transition from proof-of-work (PoW) to proof-of-stake (PoS) for Ethereum. This transition enabled Ether staking, a process involving the locking up of ETH for network security and passive yield.
Currently, over 27% of Ethereum’s supply is staked, with users depositing over $119 billion worth of ETH in staking providers like Coinbase, Lido, and EigenLayer.
The excitement surrounding spot ETH ETF approvals, defi expansion, and staking surges has contributed to a positive outlook for the cryptocurrency, encouraging users to “hodl” onto their assets for the long term. Despite a temporary retreat in Ethereum price following the surge in ETF approvals, the long-term outlook remains optimistic.
