Bitcoin and Ethereum have seen a significant decrease in user balances on centralized exchanges, reaching levels not seen since 2020. According to data from Glassnode, Bitcoin balances dropped to below 2.3 million coins, valued at approximately $160 billion, while Ethereum balances fell below 16 million, totaling less than $59 billion. This trend indicates that investors are holding onto their assets in anticipation of higher prices in a bullish market.
The decline in BTC and ETH balances on exchanges has been a continuing trend since before July 2020, as confirmed by Glassnode data. Users have been withdrawing assets from platforms amidst various market events, including the COVID-19 crisis, the 2021 peak, the 2022 Terra-FTX contagion, and the approval of spot BTC ETFs. This four-year pattern suggests that crypto users have a positive long-term outlook on these assets, showing confidence in their future appreciation regardless of market cycles.
Following the economic impact of the COVID-19 crisis in 2020, global inflation has incentivized investors to allocate capital to technologically sound assets. Bitcoin’s hard-capped supply and secure design have positioned it as an inflation hedge, leading countries like El Salvador to adopt it as legal tender. Wall Street giants like BlackRock and Fidelity have driven institutional demand through spot BTC ETFs, with companies like MicroStrategy investing billions in the digital asset.
Ethereum, as the second-largest cryptocurrency and top altcoin, has its own bullish outlook as the leading alternative to Bitcoin. It powers the largest decentralized finance (defi) ecosystem, valued at nearly $70 billion. The Beacon chain launch in 2020 marked the beginning of the transition from proof-of-work (PoW) to proof-of-stake (PoS), enabling Ether staking for network security and passive yield. Currently, over 27% of Ethereum’s supply is staked, representing over $119 billion deposited in staking providers like Coinbase, Lido, and EigenLayer.
The anticipation of spot ETH ETF approvals, defi growth, and increased staking activity has created a positive sentiment around Ethereum, encouraging users to hold onto their assets for the long term. This practice, known in the crypto community as “hodl,” reflects the belief in the potential appreciation of cryptocurrencies like Bitcoin and Ethereum amid evolving market dynamics. Investors are looking ahead to the future with confidence, showcasing a strong commitment to their digital assets despite market fluctuations.
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