As the price of ETH hits an all-time high (ATH), the coin’s supply shock appears to be compounded by an 18% drop in reserves on the exchange over the past 5 months.

ETH reserves on stock exchanges drop by 18% in 5 months

Follow post of CryptoQuant, the ETH reserves on the stock exchange have fallen sharply in recent months, which indicates a possible supply shock.

The Reserve of All Exchanges is an indicator that shows the total amount of ETH currently in the wallets of all exchanges.

A rising value of the indicator means that investors are bringing their coins for sale on the exchange, which increases the available supply of cryptocurrencies. Such a trend could be bearish for ETH.

Conversely, a loss in value means that the owners transfer ETH to their personal wallets in order to hold or sell them via OTC transactions. This trend has proven to be bullish.

ETH reserves on the stock exchange are continuously decreasing | The source: TradingView

As the graph above shows, the value of the indicator has continuously decreased since June, in the last 5 months alone the reserves have decreased by 18%.

By the way, 5 months ago was the time when ETH first exceeded $ 4,000 and about 22 million coins were reserved on the exchange. Since then, the coin has broken the $ 4,000 mark twice more, each time with fewer reserves. Currently the amount of the reserves is only 18 million ETH.

The above trend shows that the demand for ETH is very different every time the coin approaches ATH. With stocks on the stock market very low right now, the usual supply and demand dynamics tell us that a supply shock will soon drive prices higher.

BILLIONHow can ETH be? continue Price discovery?

At the time of writing, ETH price is hovering around $ 4,349, up 10% over the past 7 days. Compared to the previous month, the value of the largest altcoin by market capitalization is up 54%.

BiETH price chart 4 hours | Source: TradingView

ETH showed some volatility when the price fell to $ 3,900 a few days ago but has bounced back by the time we went to press. If the supply continues to run dry, ETH will soon rise in price and discover new ATHs.

With a return of 500% since the beginning of the year, thanks to NFT, ETH has shot up, DeFi is well received and institutional demand is also higher.

According to a graph shared by Research Director Joe Orsini at Eaglebrook Advisors, ETH rose from under $ 1,000 to current levels in record time.

Other data provided by Orsini shows that the ETH / BTC pair still has plenty of room to grow. Compared to the 2017 bull run, ETH is far from hitting its all-time high of 0.14 BTC, as it is currently around 0.07 BTC.

ETH / BTC | Source: Joe Orsini

In support of the current bull push, Delphi Digital confirms that the leverage on crypto futures will be liquidated due to a sharp drop in prices. ETH and other major coins fell to their previous higher lows in less than an hour.

The number of long liquidations has risen sharply | The source: Delphi Digital

Once traders using excessive leverage have been eliminated, prices are more likely to hold their levels. Delphi Digital notes:

“The average daily funding rate on all exchanges is down from recent highs a few days ago, but is expected to continue to fall. A number of open contracts on exchanges such as Binance and Huobi have been removed, confirming the removal of leverage mentioned above. “

ETH launches hard fork and is getting closer Come The merger

The ETH price has probably reached a new ATH thanks to the implementation of the Altair hard fork. The successfully implemented upgrade brings the network closer to the transition to proof-of-stake consensus.

In recent months, the amount of ETH locked in ETH 2.0 deposit contracts has skyrocketed as developers switched to the PoS blockchain and The Merge. This event is expected to be a potential bullish catalyst.

Investors are drawn to the PoS model because it is more efficient in energy use and potentially profitable. Under observation of Eth2 rewards, the network’s reward rate hit 5.46% on October 27, 2021.

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