The supply of Ethereum on leading cryptocurrency exchanges hits a 28-month low as demand for the coin soars
Ethereum (ETH) is the second-largest digital currency in the world and one of the most highly used. Ether is used on the Ethereum blockchain for various functions, including NFTs, DeFi and ICOs.
Its massive usage means that it is an important coin. However, Ether’s rally in recent months has also convinced people to buy and hold it for the long term. As such, ETH supply on major cryptocurrency exchanges has been declining.
The ETH supply on crypto exchanges hit a 28-month low as its demand continues to increase. According to data from crypto analytics firm Santiment, the cryptocurrency has seen exponential demand in recent months.
Santiment tweeted about this, saying, “Ethereum’s ratio of token supply on exchanges (20.1%) is now sitting at a 28-month low. We generally look for relative drops in exchange supply compared to previous months as an indication of safety from major isolated selloffs for crypto assets”.
The analyst said that the percentage of Ether on exchanged dipped to 20%, the lowest it has been in more than two years. Roughly a year ago, ETH supply on exchanges had hit a record high of 27% as the Coronavirus pandemic affected the global financial market. However, the cryptocurrency market’s rally over the past year has seen ETH rally to a new all-time high above $2,000.
Ether’s scarcity could be due to the increased institutional interest it has been receiving in recent months. The Grayscale Ethereum Trust (ETHE) currently has $5.7 billion worth of ETH under management. It is the second most popular investment vehicle offered by Grayscale, behind the Grayscale Bitcoin Trust. Grayscale has been increasing its crypto holdings since the start of the year as institutional investors clamour for ETH and other leading cryptocurrencies.