Exchanges struggle with ETH liquidity

Ethereum (ETH) reserves on centralized crypto exchanges have dropped 27% in the past two days as platforms run out of cryptocurrency

Ether reserves on cryptocurrency exchanges have declined 27% in the past 48 hours. Analysts predict that ETH could soon hit a new high. According to CryptoQuant, only 8.1 million ETH are currently available in the reserves of various cryptocurrency exchanges.

The decline in ether reserves suggests that more people are holding the cryptocurrency than they are selling or trading in it. With most investors pestering the cryptocurrency, the exchanges suffer from poor liquidity.

The rapid decline in ETH reserves on centralized exchanges has been rapid in the past few hours. Alex Saunders of Nuggets News tweeted yesterday about the reduction in ether reserves. He noted a 10% drop in ether reserves on centralized crypto exchanges yesterday. The exchanges had to accept a decline from 11 million to 10 million ETH within 24 hours.

The decline escalated by a further 20% within a few hours after the ether reserves on the exchanges fell to 8 million.

He tweeted: “The exchange could be made outside of ETH dollars within 48 hours. Demand has skyrocketed. The foreign exchange reserves have dropped by 20% from 10 million to 8 million in the last few hours. I doubt many HODLers with goals of $ 5,000, $ 10,000, and $ 20,000 will sell their ETH in the $ 1 to $ 2,000 range in the long term. “

Saunders predicts the exchanges could run out of ether in the coming days, and with most experts predicting ETH prices will rise in the $ 5,000-20,000 range over the long term, most holders may have long-term investments in the cryptocurrency .

Exchanges struggling with liquidity

The CryptoQuant data is also supported by Glassnode. According to the Crypto Analytics platform, ETH’s balances on the exchanges have fallen by 42.5% since the 14.1 million in May 2020. Glassnode data shows that currently only 7% of the circulating supply of ether is held on the exchanges.

Cryptocurrency exchanges are currently struggling with low liquidity. Earlier this week, the multi-asset brokerage platform eToro announced to its clients that it would put in place policies to curb demand for cryptocurrencies as they struggle to meet the currently overwhelming demand for bitcoin and other popular altcoins.

Saunders interprets the data from Ether as an indication that the price of the cryptocurrency could see a massive spike in the coming weeks or months. He compared the situation of Ether to Bitcoin, which saw higher demand before an epic bull run and hit $ 40,000.

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