According to on-chain statistics, investors withdrew a substantial quantity of Ethereum in 2022, as ETH reserves have decreased by more than 30%.
As suggested by an expert in a post on CryptoQuant, these investors may have withdrawn with the intention of holding for the long run. The “exchange reserve” is a statistic that indicates the total quantity of Ethereum presently kept in all centralised exchanges’ wallets.
When the value of this statistic increases, it indicates that holders are now depositing their coins in exchanges. One of the primary reasons investors use exchanges is to convert their ETH to another cryptocurrency or fiat currency. Thus, a rise in the exchange reserve may have a negative influence on the price, as it acts as the selling supply of the asset.
A decline in the indicator’s value, on the other side, indicates that investors are moving out of their coins, indicating that the selling supply is decreasing. Long-lasting exchange withdrawals may indicate that holders are actively accumulating, indicating that they are positive about the cryptocurrency.
Since the demise of FTX, the rate at which the metric’s value has decreased is an intriguing pattern to observe. This is because the failure of a well-known exchange like FTX has made investors warier than ever of centralised platforms, resulting in a large exodus of cryptocurrencies from exchanges to private wallets with privately held keys.
Over the course of 2022, the entire Ethereum exchange reserve has decreased by more than 30 per cent. The quant states that the potential of a deflationary ETH has been one of the year’s most positive developments. It seems that investors agree, as they have withdrawn substantial quantities of CEX with the intent of retaining them for the long term.
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