ETH, the second-largest cryptocurrency by market capitalization, has seen a steady decline in exchange supply over the past six months following the merger — an event that ethereum transitioned from a consensus mechanism. proof of work PoS in September 2022.
According to on-chain data shared by crypto analytics firm Santiment, the amount of ETH available to exchanges continues to decline. Since The Merge went live, ETH’s open interest on exchanges has remained below 37%. A continued reduction in supply on exchanges is considered a positive sign, as less ETH is available to trade or sell.
In September, prior to this upgrade, there were 19.12 million ETH worth $31.3 billion on exchanges. By the second week of February, that number had now dropped to 13.36 million ETH worth $19.7 billion.
Ethereum supply on exchanges. Source: Santiment
A large portion of ETH supply is moving to self-custody; meanwhile, many traders are more willing to bet on the upcoming Shanghai upgrade. Shanghai is scheduled for March – will incorporate more improvement proposals to upgrade the network and allow stakers and validators to withdraw staked ETH from the Beacon Chain.
Currently, there are 16 million ETH on the beacon chain, accounting for 14% of the total supply, which is about $25 billion at current prices – a huge amount of liquidity after the Shanghai hard fork.
In addition to the continued decrease in the supply of ETH held on exchanges, the overall supply of ETH has also decreased since the upgrade was implemented. London. The deflationary model comes from the fee burning mechanism introduced by Ethereum Improvement Proposal (EIP)-1559.
Ethereum burn rate.Source: Beacon Chain
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Ethereum price
In recent days, Ethereum has bounced off a Fibonacci support level and is now approaching the channel that was broken out earlier. Whether it returns to the channel or is rejected can determine the trend for the next few days.
Since June 2022, ETH has been trading within a symmetrical triangle pattern. This is a neutral pattern with equal opportunities for breakouts and breakdowns.
However, after bouncing off the support line of the triangle in November, ETH broke out of the pattern with a big white candle. The move also helped ETH retest the key resistance at $1,660.
Weekly RSI divergence break above support triangle. It also completed a bullish failure swing pattern by moving above the highs between divergences, currently above 50.
Hence, the underlying outlook for ETH is near the key resistance level of $2,000.
ETH/USDT weekly chart. Source: TradingView
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According to AZCoin News
