The supply of Ethereum on exchanges has hit a 10-year low. Will this trigger a price surge or further decline?

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Translated by: Baihua Blockchain

1. Increased Scarcity of Ethereum: Will Supply Tightening Trigger a Price Rebound?

The supply of Ethereum on cryptocurrency exchanges is becoming increasingly scarce, having dropped to its lowest level since November 2015. According to the latest data, only 8.97 million ETH remain on exchanges. This clearly indicates that more and more investors are choosing to hold their assets rather than trade them easily.

As many holders transfer ETH to cold storage, DeFi protocols, or stake it instead of selling, confidence in the long-term value of this particular cryptocurrency is rising, thanks to changing trading trends. However, given that Ethereum's price has sharply declined in recent months, this supply shortage comes at an interesting time. Some believe that market conditions and competitive pressures are putting pressure on ETH, while others think that fewer coins on exchanges may eventually drive prices up. Now, everyone is closely watching Ethereum's next move.

2. Why is Ethereum Supply Decreasing?

One of the main reasons for Ethereum's withdrawal from exchanges is the rapid expansion of decentralized finance (DeFi). More and more investors are choosing to transfer ETH to DeFi platforms to leverage their assets through lending, staking, or earning rewards. Many no longer simply leave ETH in exchange wallets but opt for opportunities that offer higher yields and passive income.

The emergence of staking is a significant game changer. Since Ethereum transitioned to a Proof-of-Stake mechanism, holders can now choose to lock up their cryptocurrency to support network security in exchange for rewards. Due to this major shift, a large amount of ETH is no longer circulating, further reducing the amount of ETH available for investors on exchanges.

3. Despite Reduced Supply, ETH Prices Still Decline

Typically, a decrease in the supply of any asset would push its price up due to scarcity. However, Ethereum has broken this expectation. The price of ETH has dropped nearly 45% from its December peak, trading at around $1,899 on March 21. Despite the reduced supply, Ethereum has remained one of the weakest-performing major cryptocurrencies in recent months. Several factors have contributed to the price decline, including broader market uncertainty, shifts in investor sentiment, and increasing competition from alternative blockchain networks.

4. Analysts Adjust Ethereum Price Predictions

As market conditions continue to change, financial analysts are also adjusting their expectations for Ethereum's future. One of the world's major banks, Standard Chartered, has lowered its year-end ETH price target to $4,000, a significant reduction from the previous $10,000 forecast. This clearly indicates that there are growing concerns about Ethereum's changing landscape, including increasing competition from Layer-2 solutions and rival blockchain networks.

Despite the adjustments in predictions, investors still have strong confidence in Ethereum's long-term potential. A major question now is whether new developments, such as staking-based ETFs or upcoming network upgrades, can restore investor confidence and provide a boost for Ethereum to return to previous bullish expectations.

5. Is a Recovery on the Horizon?

Although Ethereum has been struggling recently, several factors may contribute to its rebound. A significant possibility is the launch of a staking-based Ethereum ETF. If regulators approve ETFs that allow institutions to stake ETH directly, it could attract a wave of new investors. This would increase demand for Ethereum and could even push its price higher. Currently, one of the most important things is to observe the available quantity of Ethereum on exchanges. As the amount of ETH available for trading decreases, some believe that this "supply tightening" could lead to a price increase.

Article link: https://www.hellobtc.com/kp/du/03/5724.html

Source: https://coinfomania.com/ethereums-scarcity

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