Feb 16, 2023

37% Less ETH on Exchanges Post-Merge

Ether (ETH) has experienced a steady decline in exchange supply over the past six months since the Merge, a major upgrade to the Ethereum network from a proof-of-work (PoW) to a proof-of-stake (PoS) system. According to crypto analytics firm Santiment, the amount of available ETH on exchanges has dropped by 37% since the Merge. This decrease in supply is seen as a positive sign, as it indicates that traders are taking their ETH off exchanges and either storing it in their own wallets or staking it in anticipation of the Shanghai upgrade.

At the time of the Merge in September 2022, there was 19.12 million ETH, worth $31.3 billion, on exchanges. Now, in the second week of February, only 13.36 million ETH, worth $19.7 billion, is currently held on exchanges.

The Shanghai hard fork, scheduled for March, will bring further improvements to the Ethereum network. As of now, 16 million ETH, or 14% of the total supply, is staked on the Beacon Chain, amounting to approximately $25 billion in current prices. This ETH will become liquid after the Shanghai hard fork.

Since the London upgrade in August 2021, the Ethereum network has become deflationary due to the introduction of a fee-burning mechanism via Ethereum Improvement Proposal (EIP)-1559. A total of 2.9 million ETH has been burned since then, estimated to be worth $4.5 billion today.

All of these factors point to a bullish outlook for ETH. As the Merge and Shanghai upgrades continue to roll out, more ETH is likely to be staked and removed from exchanges. This could lead to a decrease in supply, which could drive the price of ETH higher.

The deflationary model of the Ethereum network, combined with the decrease in ETH supply on exchanges, could make ETH a more attractive asset for investors. Furthermore, the introduction of NFTs (non-fungible tokens) has opened up a new avenue for ETH promotion and marketing. Companies are now using Twitter NFT marketing and working with web3 agencies to promote their NFTs and sell them to a wider audience. This could lead to an increase in demand for ETH, as NFTs are usually purchased with ETH.

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