Most notably, Binance and Coinbase, two of the world’s largest exchanges by trading volume, are the major culprits behind this persistent ETH outflow trend.
Going higher on the timeframe, CryptoOnchain cited the outflow of ETH over the span of roughly two months to be over 2.6 million Ether tokens across centralized exchanges. Interestingly, the analyst noted an apparent inverse correlation between ETH exchange holdings and the market price of Ethereum.
The general increase in outflows from exchanges, specifically Coinbase and Binance, suggests an ongoing accumulation of Ethereum tokens. Typically, exchange outflows indicate that investors are moving their assets from exchange addresses to non-custodial wallets.
Essentially, this trend signals that investors are no longer looking to sell their Ethereum tokens but rather hold them in the long term. The earlier-mentioned inverse correlation between Ethereum exchange holdings and ETH price supports this conjecture.
When there is a significant withdrawal of digital assets from exchange addresses to holder wallets, a phenomenon known as a supply shock may ensue. For context, a supply shock or supply crunch refers to a drop in the amount of an asset available in the open market, leading to a jump in prices.
As of this writing, the Ethereum price stands at around $4,276, reflecting an almost 1% decline in the past 24 hours. According to CoinGecko data, the second-largest cryptocurrency is down by more than 2% in the last seven days.
