On-chain data shows the Ethereum Exchange Supply Ratio has continued to maneuver flat around 2016 lows, an indication that could be bullish for ETH.

Ethereum Exchange Supply Ratio Has Been At Lows Recently

In a CryptoQuant Quicktake post, an analyst has talked concerning the recent trend within the Ethereum Exchange Supply Ratio. The “Exchange Supply Ratio” is an on-chain metric that keeps track of the ratio between ETH’s Exchange Reserve and its total supply in circulation.

The “Exchange Reserve” here refers to a measure of the entire amount of the cryptocurrency that’s currently sitting within the wallets connected to centralized exchanges.

When the worth of this indicator goes up, it means the investors are depositing their coins to exchanges. As certainly one of the major the reason why holders would transfer to those platforms is for selling-related purposes, this type of trend can have a bearish effect on the asset’s price.

However, the metric registering a decline suggests a net amount of the provision is exiting from the exchanges. Generally, investors take their coins off into self-custodial wallets every time they plan to carry into the long-term, so such a trend may transform bullish for ETH.

Now, here is the chart shared by the quant that shows the trend within the Ethereum Exchange Supply Ratio over the past decade:

The worth of the metric appears to have been stale in recent months | Source: CryptoQuant

As displayed within the above graph, the Ethereum Exchange Supply Ratio hit a peak back in 2020. During this high, the exchanges held greater than 30% of the asset’s entire circulating supply.

Since then, nonetheless, the indicator has been in a relentless decline, despite the undeniable fact that the asset’s supply has gone up. Because of this the investors have pulled out coins at a rate exceeding the provision expansion.

This 12 months, the metric has fallen to sideways movement, suggesting an equilibrium has been reached within the sector. Interestingly, this flat motion has come despite the price appreciation that Ethereum has been having fun with.

The trend would naturally imply that not many investors of the cryptocurrency are able to part with it yet. At the identical time, though, a consistent accumulation like before isn’t happening, either, so it’s not like there aren’t any sellers in any respect.

Nonetheless, the undeniable fact that the indicator has no less than remained in balance throughout this rally could possibly be a positive sign for its sustainability. The metric could now be to regulate in the longer term, simply to make sure that that the trend continues.

Any reversals to the upside would, in fact, signal that the investors have began to sell, which can mean the Ethereum bull run could possibly be approaching its climax.

BTC Price

On the time of writing, Ethereum is trading around $3,600, up greater than 9% over the past week.

Looks like the worth of the coin has been moving up over the previous few days | Source: ETHUSDT on TradingView

Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com