Recent analysis has shown that Ethereum's exchange balances are declining to levels seen in 2016. This phenomenon is attributed to several factors, including staking and self-custody.
Declining Exchange Balances
Glassnode data reveals that Ethereum balances on exchanges have fallen to about 16 million ETH, which aligns with 2016-2017 levels. The decline has been noted since 2020 when balances peaked at about 30 million. This change is characterized as structural rather than short-term.
Historically Negative Netflows
According to the exchange netflow dashboard, persistent negative trends have been observed since late August. This indicates that coins are moving to staking and DeFi, rather than to spot venues. Strengthening trends are observed in terms of a 'tight float'.
Ethereum Price Structure and Support Levels
On the four-hour chart, Ethereum traded within a compressing triangle, holding above support levels. Prices oscillate between converging trendlines. Upside confirmation is expected with a break above the descending trendline.
The decline in Ethereum's exchange balances and negative netflows indicates a reduction in available sellable assets, which could lead to volatility with increased demand. However, significant risks include sudden inflows to exchanges.
