Ethereum (ETH) reserves on centralised crypto exchanges have plunged by 27% over the last two days as platforms run out of the cryptocurrency
The Ether reserves on cryptocurrency exchanges dropped by 27% over the past 48 hours, with analysts predicting ETH could soon hit a new all-time high price. According to CryptoQuant, only 8.1 million ETH is currently available in the reserves of various cryptocurrency exchanges.
The decline in Ether reserves indicates that more people are holding the cryptocurrency rather than selling or transacting it. With most investors hodling the cryptocurrency, the exchanges are suffering from low liquidity.
The rapid decline in ETH reserves on centralised exchanges was rapid over the past few hours. Alex Saunders of Nuggets News tweeted about the reduction in Ether reserves yesterday. He noted a 10% drop in Ether reserves on centralised crypto exchanges yesterday. The exchanges suffered a drop from 11 million to 10 million ETH within 24 hours.
The decline escalated by another 20% within a few hours after the Ether reserves on exchanges plunged to 8 million.
He tweeted, “Exchanges could be out of $ETH within 48 hours. Demand has skyrocketed. Exchange reserves fell 20% from 10M to 8M in the last few hours. With targets of $5k, $10k & $20k long term, I doubt many HODLers will sell their ETH in the $1—2k range”.
Saunders predicts exchanges could run out of Ether over the coming days, and with most experts predicting ETH prices to rise in the range of $5,000—$20,000 in the long-term, most holders will possibly invest in the cryptocurrency for the long term.
Exchanges struggling with liquidity
The CryptoQuant data is also supported by Glassnode. According to the crypto analytics platform, ETH balances on exchanges is down by 42.5% since the 14.1 million recorded in May 2020. Glassnode data shows that only 7% of Ether’s circulating supply is currently held on exchanges.
Cryptocurrency exchanges are struggling with low liquidity at the moment. Earlier this week, the multi-asset brokerage platform eToro notified its customers that it would roll out policies to curb demand for cryptocurrencies as it struggles to fulfil the overwhelming demand it currently faces for Bitcoin and other popular altcoins.
Saunders interprets Ether’s data as suggesting that the cryptocurrency’s price could experience a massive surge in the coming weeks or months. He likened Ether’s situation to Bitcoin, which experienced higher demand before an epic bull run to reach $40,000.