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Ethereum: August’s trading activity falls, the reason is obvious

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Since the start of 2023, Ethereum’s liquid supply has progressively reduced, marking a decisive shift towards HODLing and staking.

Ethereum: August trading activity plummets - the reason why is obvious

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  • ETH reserves across centralized crypto exchanges fell to a five-year low.
  • Staked ETH supply has been hitting new all-time highs almost daily.

Ethereum’s [ETH] liquid supply plummeted to new depths, as seasoned investors explored options other than active trading.

As per a recent update by on-chain analytics firm Glassnode dated 11 August, ETH reserves across centralized crypto exchanges fell to a five-year low of 15.1 million ETH. To put this in context, the amount represented just 12.57% of all ETH tokens in circulation, down from roughly 30% in mid-2020.


Is your portfolio green? Check out the Ethereum Profit Calculator


Trading activity dries up

Since the beginning of 2023, exchange supply has progressively reduced, marking a decisive shift in sentiment towards HODLing and staking.

Data from Token Terminal corroborated the aforementioned assertion. After hitting a crescendo in March, monthly ETH trading volumes have fizzled out.

In fact, August started on a much weaker note, recording volumes of just $66 billion as of this writing. If no substantial bullish or bearish event emerges, August could finish up with the dubious distinction of clocking the lowest monthly ETH volumes in 2023.

Source: Token Terminal

Diamond hands stay put

Long-term holders (LTH) have shown less willingness to let go of their ETH stashes. Dormant supply i.e. coins that haven’t moved in a particular time span, have been charging to new highs lately.

According to data from Glassnode, the supply being held for more than two years but less than three years shot up to a 20-month high of 13.1 million ETH.

Source: Glassnode

A cursory glance at historical price charts was enough to reveal the factors driving HODLing for the aforementioned user cohort. Most of these investors acquired ETH during the historic bull market of 2020-21 when ETH reached new highs.

Despite a spirited recovery in 2023, the price of ETH has not risen sufficiently since then. It’s possible that prompted the experienced traders to play the waiting game until the market regains bull momentum.


Read Ethereum’s [ETH] Price Prediction 2023-24


Staking remains a hot trend

However, not everyone was HODLing to wait for the next bull cycle. Some traders took their ETH holdings out of the market and locked them up to generate passive income.

The launch of the Shapella upgrade spurred a new wave of optimism in ETH staking. Staked ETH supply has been hitting new all-time highs (ATH) almost on a daily basis since Shapella went live. The latest update by Glassnode revealed a total of 27.35 million ETH deposited in Ethereum’s staking contract.

 

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Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.
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