According to blockchain analytics, 25% of the total Ethereum supply on exchanges was removed last year.
In January 2021, there were more than 24 million ETH on all recorded exchanges.
Since then, however, there has been a slow and consistent month-over-month drop, with 18 million ETH currently living on exchanges like Coinbase or Kraken.
The amount on exchanges appears to correlate to price, but not completely since total supply remained a fairly steady straight line between April and June 2021.
On the other hand, the price doubled to more than $4,000 before halving to $2,000, as seen below.
That might be pure guesswork, but it’s also possible that the advent of decentralized finance has given ETH asset holders more alternatives.
During the summer, the quantity of ETH on decentralized finance (defi) tracked the price, with about 2 million ETH added between March and April.
We may be seeing in terms of supply on exchanges an inverse connection with the above-mentioned defi chart, rather than a correlation with price.
Supply on exchanges has steadily declined to 6 million ETH, while supply on defi has steadily grown to 7.4 million ETH, valued at $26.4 billion.
Then there’s more than 500,000 ETH that has been and will continue to be burnt. Accounting represents around 20% of the entire quantity of Ethereum that has been effectively removed from circulation.
That’s a supply constraint like ETH has never experienced before, although some of it may have been hoarded anyhow.
However, defi introduces new opportunities, and many of them would not have occurred otherwise.
As a result, exchanges are now more for admission than for exit because there’s a lot you can accomplish without going fiat once in.