Are Ethereum traders expecting a price rally soon?

• The total supply of Ether on centralized exchange platforms is lower than it used to be in 2018.
• Over 180,000 ETH left trading platforms on March 15 alone.
• Centralized platforms have larger supply of a particular asset when there are more available sellers.

Ethereum remains the second most valuable cryptocurrency in the world, but a change in the platform’s token value suggests that investors may be expecting a rally soon. According to a report by Cointelegraph, citing data from blockchain tracking firm Glassnode, the amount of ETH available on crypto exchanges has fallen to its lowest levels since September 2018, which is a sign that traders are holding on to their tokens.

According to the report, the data shows that about $1.61 billion worth of ETH tokens have left centralized trading platforms in the year-to-date, and 30% of the withdrawals made in 2022 came in the past week alone. Over 180,000 ETH tokens made their way out of centralised trading platforms on March 15, and the overall balance of Ether on these platforms has dropped to 21.72 million.

Centralized exchanges hold a custodial wallet for their users, which is where all the crypto is held. They usually have enough supply of an asset that has more sellers than buyers.

Why is Ether expected to rally?

The change in Ether’s behaviour is likely in anticipation of the Ethereum 2.0 update that is expected later this year, which brings the proof-of-stake (POS) system to the platform.

The POS system is a change in how cryptocurrencies are mined, and is said to reduce the energy consumption from crypto mining as well. According to the Ethereum Foundation, which manages the platform, the move to POS will cut Ethereum’s energy consumption by 99.5%.

To be clear, POS mining rewards miners based on the stake they provide in the system, instead of allowing anyone to put their computing resources behind a transaction. In comparison, the proof-of-work (POW) system allows miners to take on the task of validating a transaction, which increases the total computing power for each transaction.

With Ethereum being the backend for some of the world’s largest crypto projects, using NFT platforms like OpenSea, and NFT projects like Bored Apes etc, it’s important for its carbon footprint to be low.

In addition, the Ethereum platform has been gaining stiff competition from newer blockchain platforms as well. This includes the likes of Cardano, Solana and the Binance Smart Chain (renamed to BNB Chain last month).

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