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Ethereum Balance Drops At A 5-Year Low, What Drove It Downwards?

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  • ETH balance decline is now at its all-time low in 5 years
  • ETH is triggered by the downfall of FTX

Ethereum is going through a rough patch right now. Ether’s balance and its total worth have come down to an all-time low since 2018. As per the reports, the available balance is $1,872 right and the total amount on exchanges collectively is 17.86 million. 

Based on the data provided by Glassnode, the centralized exchanges currently hold 14.85% of the total Ether. In 2021, this number was 25-25% and was a major driver behind ETH’s price hike run. Apparently, this drop happened due to the FTX collapse that happened in November last year. 

And besides the fall in balance, Ethereum wallet addresses holding more than 100ETH have also come to a six-month low. But, Now except for the FTX debacle, there’s another one more reason that seems to have played a significant part. Launched in April 2023, the Shapella upgrade enabled validators to withdraw their staked ETH whenever they wanted to. This resulted in a large number of token holders withdrawing their staked rewards which actually went against popular belief. 

On the contrary, only a handful of validators decided to unstake their assets. Now when the assets are moved away from the exchanges, it is considered a sign of bullish movement. It indicates that traders are ready to part with their tokens making them valuable. In the case of Ethereum, when the tokens restacked, they brought the value and numbers down.

All the major crypto exchanges including Kraken, Bitfinex, and Binance have supported the Shapella upgrade. They all noticed their ETH users withdrawing the assets from their wallets which precipitated the decline. 

As per the Cointelegraph report, the amount of ETH being staked exceeded the amount of ETH being withdrawn before Shapella was rolled out. In another report, Glassnode anticipated that less than 1% of staked ETH was expected to be sold. Therefore, a large amount of ETH which was deviating from centralized exchanges made its way back to staking.  

Conclusion

Driven by token holders’ migration and Shapella upgrade, the ETH is facing a downward trend right now. However, it is the second-biggest crypto asset and its prominence is unchallenged on many fronts. So we’ll have to see how long this downfall lasts and how it impacts the market.

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