The amount of Ethereum (ETH) held on centralized cryptocurrency exchanges or CEXes has been continuously reducing since September last year. On Tuesday, ETH reserve on exchanges dropped to another low, which is quite bullish, provided the demand for the cryptocurrency continues to soar.
During press time, the second-largest cryptocurrency with a market capitalization of over US$207 billion, was trading at $1,801 on Coinmarketcap. Many holders think that ETH is undervalued, owing to the growing network traction and ecosystem.
ETH Reserve Might Drop Further
There are currently less than 21 million ETH sitting on centralized exchanges, according to data from CryptoQuant.
The declining amount of ETH in exchange reserve is probably due to more holders moving their cryptos to external wallets for HODLing. The decentralized finance (DeFi) is one other factor behind the decreasing ETH reserve. Among other things, traders are moving ETH from centralized exchanges to decentralized platforms like Uniswap, SushiSwap, Compound, etc., for trading and lending.
This is evident as there is about 9.138 million ETH currently locked in DeFi projects. This equals over US$16 billion, following the price of the cryptocurrency during press time.
Another place to watch is the Ethereum 2.0 staking contract. The ETH reserve on centralized exchanges dropped further after the deployment of the deposit contract. At the time of writing, a total of 3,588,404 ETH has been staked on the network so far, which is worth over US$6.4 billion.
Is This a Bullish Case?
The reserve is likely to decrease further as more people increasingly participate in DeFi projects and Ethereum 2.0 staking. This is quite bullish, as less supply with more demand could see ETH soaring in price.
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