The recent decision by Ethereum users to lock their ETH after the Merge has had a significant impact on the exchange supply of the cryptocurrency. Over the past seven weeks, ETH exchange supply has decreased by 16.4%, reaching its lowest level since November 2015. This trend indicates a shift in investor behavior, with many opting to move their ETH out of centralized exchanges.
According to data from Santiment, there has been a consistent decline in Ethereum supply on centralized exchanges, reflecting a growing confidence in the long-term potential of the cryptocurrency. ETH holders are increasingly using their tokens for staking and decentralized finance (DeFi) activities, rather than focusing on immediate trading.
The shift in supply is largely driven by the rising interest in DeFi functions and staking rewards. Since the Merge, Ethereum users have been locking their tokens to participate in staking, which offers rewards and enhances network security. Moreover, Ethereum’s prominent position in the DeFi sector has attracted a diverse range of users engaging in activities such as lending, liquidity provision, and yield farming.
This change in ownership pattern signifies a preference among investors to actively participate in the Ethereum network, rather than keeping their ETH on centralized exchanges. The increased interaction with the platform not only supports its long-term sustainability but also contributes to its growth.
The decline in ETH exchange supply has accelerated in recent weeks, marking the largest drop since late 2024. This trend underscores growing investor confidence in Ethereum as a yield-generating asset, rather than just a trading instrument. The outflow of ETH from exchanges suggests that holders anticipate a rise in the cryptocurrency’s value, reinforcing a bullish outlook for the future.
The diminishing exchange supply of Ethereum could have a significant impact on market dynamics. With limited ETH availability, prices may trend higher due to scarcity and stable demand levels. Additionally, reduced liquidity on exchanges could lead to increased volatility, amplifying price movements.
Overall, the ongoing migration of Ethereum from centralized platforms to DeFi and staking activities highlights a strong network confidence and reinforces bullish sentiment. As more capital flows into DeFi and staking, Ethereum’s position as a valuable long-term asset solidifies within the evolving crypto market landscape.