Only 18% of Ethereum (ETH) remains on exchanges
Not enough Ethereum on the Exchanges! A stone's throw from a vertical take-off!
The volume of Ethereum (ETH) stored on exchanges is increasingly low, having thus reached its lowest level since 2018.
With only 18% of ETH present on these platforms, the majority of investors seem to be moving towards external storage solutions. This is the case with smart contracts. Smart contracts, otherwise known as intelligent contracts, are irrevocable computer programs. They are most often used on blockchains in order to execute various pre-defined instructions.
Is this change in behavior of cryptocurrency investors general or specific to Ethereum (ETH)? Is there a consequence on the price of ETH? And finally, is the historical link between Bitcoin and Ethereum also impacted?
- 27.6% of Ethereum locked in smart contracts
- The price of ETH is getting closer and closer to €3,000
- Impact on Bitcoin / Ethereum “competition”
27.6% Of Ethereum Locked In Smart Contracts
Glassnode analysts have come up with an interesting figure, that 27.6% of ether is locked in smart contracts.
First of all, it is worth pointing out that smart contracts are strongly favored by blockchains due to certain undeniable advantages:
- an impressive reduction in intermediate costs,
- securing agreements,
- and automation of payments.
Despite certain disadvantages such as the risk of hacking, which goes hand in hand with any computer program, smart contracts represent an increasingly high portion of stored ETH. This of course to the detriment of traditional trading platforms.
The co-founder of Glassnode himself confirmed this information. He indicated on Twitter that only 18% of the Ethereum supply remains stored on the usual platforms.
This change in investor behavior is particularly revealing. It is by looking at how smart contracts work that these new investment methods will become clearer.
A smart contract offers an IT solution perfectly equivalent to a paper contract, with however the benefits of digital technology at each stage of the contract. During the execution of the smart contract, each validation step is thus recorded in the blockchain used. This method has the main benefit of securing all the data related to the contract and the parties to the contract.
The Reign Of Smart Contracts
From a pragmatic point of view, smart contracts are an ideal solution for automating exchanges in the form of cryptoassets. As a result, all accounting entries are recorded in the blockchain linked to the smart contract. These assets are therefore both public knowledge, foreseeable and irrevocable.
Unlike contracts dominated by human intervention and interpretation, these new generation contracts are a real guarantee against various risks. These risks include, for example, legal loopholes, errors of interpretation, conditions that are too flexible, or even too much space left for negotiation. They exist under certain standards, the best known being the ERC-20. Its main function is to enable the creation of tokens on the Ethereum network.
The Price Of ETH Is Getting Closer And Closer To €3,000
From one week to another, Ethereum sees its price vary between 2,500 and 3,000 €. ETH owners are thus witnessing a price substantially approaching the significant threshold of €3,000, while new investors are perpetually attracted.
Some experts in the financial world go so far as to say that the price of Ethereum could exceed $6,500 by the end of 2022. This estimate even risks aiming for 26,000 dollars for the 2030 horizon.
To pick up on the initial subject of ETH volumes withdrawn from classic exchanges, a link can be made with this rising ether price. Lately, in the space of just 24 hours, more than 180,000 ETH tokens have been withdrawn from centralized exchanges. This represents the largest cryptocurrency outflow since early 2022.
A total of 180,710 ETH was thus withdrawn as of March 15, all platforms combined (Kraken, Binance, etc.).
Based on the price of ETH hitting $2,590.40 on that specific date, that means the value of the withdrawn tokens was over $468 million. The IntoTheBlock platform also comments on this news: “The last time such a quantity of ETH was withdrawn was in October 2021, preceding a price increase of 15% in ten days. »
Of course, we can wonder what impact this will have on the Bitcoin/Ethereum relationship. These two cryptocurrencies are the most important in the market in terms of capitalization. They display a degree of correlation of +0.97. Competition and symbiosis are thus perfect qualifiers.
Impact On Bitcoin / Ethereum “Competition”
The phenomenon related to smart contracts described above also rubs off on Bitcoin. With nearly 27.3% of BTC managed through smart contracts, the gap between the two cryptocurrency behemoths could be increasingly narrowed.
Bitcoin (BTC) and Ethereum (ETH) prices hold valuable insights into general market sentiment. In this case, since the beginning of 2022, this sentiment reveals a return to risk -taking by investors.
The spread between BTC and ETH is widening over the weeks, a widening that appears to be in favor of ETH . If we base ourselves on the study of the prices of each of these two cryptocurrencies, a tightening of the spread would be a sign of a neutral position for investors. Currently, a gap in favor of ETH appears to be forming. This gap in favor of Ethereum is indicative of the great risk-taking of users.
It is precisely the existence of this gap in favor of ETH and this new wave of risk-taking that justifies the rise in the price of ether. The Bitcoin/Ethereum “competition” thus maintains its reputation as a perpetual confrontation, with both strong correlation and regular deviations.