Ethereum : The balance on exchanges falls to its lowest level in 3 years
3 min readMar 11, 2022

Thanks to a recent surge in Ethereum, coupled with the establishment of an array of record high prices, asset balance levels on exchanges are falling for a variety of reasons. The level of Ethereum’s balance on specialist exchanges has risen to a three-year low of 14,042,589,584 ETH, Glassnode reports. In addition, they stress that the balance, falling smoothly since December 4, 2021, showed the lowest level in the last three years at 14,059,101,985 ETH .

Small amounts of ETH on trading platforms are considered a bullish signal for markets. Typically, withdrawals result in a reduction in supply as demand on common cryptocurrency trading platforms decreases. Moreover, the ongoing updates to the network are having an impact on supply and demand for the second-largest cryptocurrency. For example, the update that took place in London introduced a commission-burning mechanism on the Ethereum market, leading to increased inflationary strains on the token’s supply dynamics.

The reduction in swap balances also indicates that investors with long-term activities are moving their assets into secure bank vaults or blocking their funds in order to take advantage of them. Decentralised financial protocols or betting can be used for this purpose. The use of predominantly centralised wallets is seen as dangerous and unprotected from hackers. It should be noted that Ethereum is undergoing an upgrade that will incorporate stacking features into the network.

The central exchanger’s security has recently come under increased scrutiny after a hack resulted in cryptocurrency exchange BitMart incurring a loss of around $196 million. However, investors are likely counting on this asset to continue growing. Moreover, according to some market analysts, Ethereum has the potential to outperform Bitcoin. Ethereum’s deteriorating balance sheet at the expense of exchanges coincides with an active rise in Ethereum sales in the form of trading contracts. That said, it must be remembered that smart contracts have been a source of growth in decentralised finance (DeFi). The growth of DeFi has created opportunities for alternatives to the existence of centralized exchanges, as well as creating new forms of interaction with the cryptocurrency ecosystem, such as lending and farming. As a consequence, the asset will linger longer in the Ethereum ecosystem, rather than on exchanges, as currencies grow.

The remaining amount of Ethereum on the exchanges collapsed to 14,042,589,584 ETH. The reasons behind such an unprecedented event in three years are many. Undoubtedly, withdrawals and recent innovations that have had a strong impact on cryptocurrency supply and demand are also partly to blame. Also quoted is the theory that investors are moving their funds to more secure hubs. After all, centralised exchanges are indeed notoriously notorious when it comes to asset security. DeFi in this case acts as a safe alternative.

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Tatiana Leverya, Team bit4you.



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