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**Ethereum Exchange Holdings Dwindle to a Decade’s Nadir**
The quantity of Ethereum (ETH) residing on cryptocurrency platforms has plummeted to its nadir since November of 2015. We’re referring to roughly 8.97 million ETH accessible for trading at this juncture.
Per a Santiment report dated March 21st, this contraction is primarily attributable to the escalating adoption of decentralized finance (DeFi) and staking mechanisms. Rather than storing their ETH on exchanges, an increasing number of holders are sequestering it to accrue rewards or engage with DeFi protocols. This diminishes the immediate impetus to liquidate. The ETH supply on exchanges has diminished by over 16% in the preceding couple of months, implying that individuals are accumulating it for extended durations.
Nevertheless, this supply constriction hasn’t notably propelled Ethereum’s valuation *as of yet*. ETH has depreciated substantially – approximately 47% – from its peak of $4,105 in December, exchanging hands at around $1,990 on March 21st. It has, in fact, been among the most poorly performing prominent cryptocurrencies of late.
Certain analysts posit that further price retrenchments may be imminent. For instance, Standard Chartered recently revised its year-end price forecast for ETH from $10,000 to $4,000. They attributed this to heightened competition from alternative networks, particularly Ethereum “layer-2” solutions.
These layer-2 networks proffer substantially diminished transaction levies, which is drawing in users and curtailing activity on the primary Ethereum network. In the past week alone, Ethereum-based decentralized exchanges (DEXs) processed approximately $9.8 billion in trades, but a substantial portion of that – $5.67 billion – transpired on layer-2 networks such as Arbitrum (ARB) and Base.
Monthly trading volume on Ethereum DEXs has receded from $92 billion in December to $82 billion in February, and further diminution is anticipated in March. This contraction in mainnet utilization is impacting Ethereum’s fee revenue, which constitutes a pivotal facet of its economic paradigm. Ethereum’s fee revenue has plummeted precipitously from $218 million in December to a mere $46 million in February.
Despite the recent Dencun upgrade substantially curtailing transaction expenditures (gas fees) by approximately 95%, Ethereum’s revenue persists in declining. The total value locked (TVL) within Ethereum-based DeFi protocols has also dwindled from $76 billion in December to $46 billion.
Ethereum may be close to a reversal, and exchange-traded fund (ETF) staking may be crucial. Both the New York Stock Exchange and the Chicago Board Options Exchange have requested SEC approval for Ethereum ETFs. However, institutional investor interest remains weak, as Ethereum spot ETFs saw outflows of $370 million last month.
From a technical point of view, Ethereum continues to decline, facing resistance around $2,042. Bollinger Bands show low volatility, indicating that the market may be in consolidation, while the 50-day moving average creates an obstacle.
Despite the lack of momentum, Ethereum is recovering from oversold conditions with a relative strength index (RSI) of 41.22. Low volume indicates trader hesitation, but a slight recovery indicates some buying behavior.
If The Rise of Ethereum Applications: The Emergence of Stablecoins Issued by Banks successfully breaks the $2,042 resistance level, the next targets will be $2,163 and $2,370. If the $1,986 support level is broken, the price could fall further to $1,714, where buying interest has been observed in the past.
