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Ethereum Bleeding From Cryptocurrency Exchanges…Here’s What It Means For The Market!

Ethereum Bleeding From Cryptocurrency Exchanges…Here’s What It Means For The Market!

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Answer Ethereum Bleeding From Cryptocurrency Exchanges…Here’s What It Means For The Market!

While sentiment around the cryptocurrency industry is becoming more positive, more Ethereum investors are choosing to withdraw their funds from cryptocurrency exchanges and leave it in their wallets, according to CryptoQuant.

While this is a positive sign for the market, institutional or individual investors may experience some liquidity issues with the current flow rate.

The current reserves of Ethereum in trading platforms:

At press time, Ethereum reserves in crypto exchanges are estimated at 18.5 million ETH, decreasing gradually from August.

In the past days, after the rapid price increase in the altcoin market, some trading platforms experienced slight inflows.

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Ethereum reserves increased from 18.49 million to 18.7 million in just two days.

Source: CryptoQuant

After the increase in inflows to the exchanges, the price of Ethereum rebounded from $3,500 to $3,415, indicating the intraday emergence of selling pressure on the exchanges.

Then the reserve fell back to its current levels.

Liquidity problems:

While the total reserves of Ethereum in exchanges currently stand at $64 billion, which represents about 15% of the current market capitalization of the second largest cryptocurrency, with the possibility of incoming funds flowing into the market, some large investors may face liquidity issues.

The main source of potential influx is related to the approval of financially backed Bitcoin ETFs.

Although there are no plans for an Ethereum ETF, the fact of approval will set a precedent that could on its own attract more institutional-grade investors to the market.

In addition to the continuous decrease in the reserve, the circulating supply of Ethereum is also decreasing due to the fee-burning mechanism.

While the demand for DeFi and NFT tokens remains high, it is likely that the Ethereum network will continue to burn more cryptocurrencies than miners can achieve.

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All of this works in favor of the scarcity of Ethereum in exchange for the increased demand for it, which is reflected positively on the price of the currency.

Read also:

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