Key Points
- Ethereum users are increasingly moving their holdings away from exchanges, indicating a rise in self-custody.
- Despite retail interest, the number of new Ethereum addresses and network growth has declined.
Ethereum recently experienced a significant price correction, despite the expected launch of spot Ethereum ETFs.
Increasing Trend of Self-Custody
Data from Santiment indicates a shift in how Ethereum holdings are distributed. Users are increasingly moving their Ethereum away from exchanges. The top 100 exchange wallets have dipped below their May 2018 low, currently holding only 8.41 million Ethereum. This suggests a decrease in Ethereum concentration on exchanges.
Conversely, the top 100 non-exchange wallets are at an all-time high of 68.39 million Ethereum. This indicates a rise in self-custody, meaning more users are storing their holdings in their own wallets instead of keeping them on exchanges.
If this trend persists, it could support Ethereum’s decentralization claim. A more distributed network with less reliance on centralized exchanges aligns with the core principles of blockchain technology.
Potential Impact on Ethereum
However, reduced liquidity on exchanges due to the decline in Ethereum holdings could lead to higher price volatility for Ethereum. With fewer coins available for trading, price fluctuations could become more pronounced in response to market changes.
While increased self-custody could be seen as positive, there are other potentially concerning factors for Ethereum. For example, some large addresses have been selling a significant amount of their holdings without accumulating. This could negatively affect Ethereum’s price in the future.
Despite the price dip, retail investors continue to show interest in Ethereum. However, this interest hasn’t been significant enough to influence Ethereum’s price. Additionally, Ethereum’s network growth has decreased over the past month, indicating a reduction in new Ethereum addresses.
This decline in network growth suggests that Ethereum accumulation is being done by pre-existing holders. Furthermore, the frequency at which Ethereum was traded also fell over the last few days.
