Ethereum (ETH) Withdrawals from Exchanges Accelerated ahead of London Upgrade, Data Shows
Ahead of the much-awaited London Upgrade, cryptocurrency exchanges have to contend with accelerated withdrawals of ETH, on-chain data by CryptoQuant reveals.
Staking on Eth 2.0
As of July 5, ETH reserves in all leading cryptocurrency exchanges had dropped to a two-and-a-half-year low.
At the backdrop of this is relatively high ETH prices as scarcity of the coin increases. Analysts are pinning this development to several factors.
On the one hand, Ethereum is transiting from a Proof-of-Work to a Proof-of-Stake consensus algorithm system removing miners for validators.
The latter system requires ETH staking.
Since December 1, 2020, when Phase 0, Beacon Chain, was activated, validators have been flowing to the parallel network, securing it by staking coins.
Unlike other Proof-of-Stake blockchains, Ethereum is fully functional and boasts superior infrastructure and activity among all public chains.
For comparison, Ethereum’s transaction count exceeds Bitcoin’s though the latter is the first public chain.
Staking, observers, explain is one of the primary reasons for the outflow from exchanges where ETH holders prefer to earn passive yields without worries of the network going burst.
Ethereum Whales Now Hold over 70% of Coins in Circulation
Meanwhile, whales are sensing opportunity ahead of implementing what would perhaps shape Ethereum and ETH prices in the day ahead.
Data from Santiment reveals whales’ activity accelerating. They now hold 70 percent of all ETH in circulation for the first time since September 2017.
Resurgence of DeFi Activities and the London Upgrade
As cryptocurrency exchanges struggle to stem the outflow, DeFi protocols continue to lock more ERC-20 tokens and ETH.
In early July, DeFi TVL, as per Defipulse, is up from around $48 to $56 billion. It is during this time when ETH prices also surged above $2k to spot rates.
Notably, the decrease of ETH prices saw ETH movement to exchanges for liquidation purposes spike, and DeFi activities shrink in tandem. Therefore, this shift of trend hints at confidence and possible repricing of ETH as the demand tide rise.
This accumulation is ahead of EIP-1559 during the London Upgrade set for this month. The improvement makes Gas fees more predictable and ETH deflationary due to fee burning.
As BTCManager reports, EIP-1559 testing is ongoing.