Bitcoin and Ethereum exchange reserves hit lowest level in four years
Bitcoin and Ethereum user balances have recently decreased to levels last observed in 2020, according to Glassnode data. The balances of Bitcoin (BTC) and Ether (ETH) on centralized exchanges have hit a four-year low as investors opt to wait for higher prices during a bullish market.
The number of BTC and ETH on exchanges has been declining since before 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 taken on a positive long-term perspective, showing confidence in the future growth of these assets regardless of market fluctuations. Following the global economic instability caused by the COVID-19 crisis in 2020, investors have been drawn to technologically solid investments. Bitcoin’s limited supply and secure design have solidified its position as an inflation hedge, with countries like El Salvador adopting it as legal tender.
Institutional demand for Bitcoin has been boosted by major players like BlackRock and Fidelity through spot BTC ETFs. Companies such as MicroStrategy, led by Bitcoin advocate Michael Saylor, have also invested significant amounts in the digital asset.
As the leading altcoin and the second-largest cryptocurrency, Ethereum has its own positive outlook as a top alternative to Bitcoin. Ethereum powers the largest decentralized finance (defi) ecosystem, valued at nearly $70 billion according to DefiLlama.
The launch of the Beacon chain in 2020 marked the beginning of the transition from proof-of-work (PoW) to proof-of-stake (PoS) for Ethereum. This shift enabled Ether staking, a process where users lock up ETH for network security and passive income.
Currently, over 27% of Ethereum’s supply is staked, with users depositing more than $119 billion worth of ETH in staking providers like Coinbase, Lido, and EigenLayer.
The excitement surrounding the approval of spot ETH ETFs, the growth of defi, and the surge in staking has contributed to a positive outlook for Ethereum. This has encouraged users to “hodl” or hold onto their assets for the long term, despite short-term market fluctuations.
