Overall, 2021 can be described as a good year ether, has grown in value by more than 450% to date. Despite Ethereum’s strong performance this year, outflows from Ethereum exchanges have fallen to a 4-year low.
According to data from Glassnode, the outflows from the ETH Exchange are currently at their lowest level since January 2018. The exchange cash flow shows the number of tokens that were withdrawn from the exchange wallet in a certain period of time.
Forex cash flow has long been used as an indicator to spot trends in the cryptocurrency market. While investors see low forex cash flows as harbingers of a downtrend, Ethereum’s situation may be the exception many have been hoping for.
The foreign exchange cash flow decreases when the ETH price increases
The interesting thing about the declining outflow from Ethereum is that it correlates with an increase in Ethereum price.
Word order data KryptoQuant confirms that the ETH exchange inflows have steadily declined over the course of the year.
The graph shows the flow of the Ethereum derivatives exchange from January 1, 2021 to December 27, 2021 (source: KryptoQuant)
As for the context, ether Holders who expected a major rally after the ATH in November could be moving their holdings off the exchanges and potentially contributing a large part of the decline.
Bitcoin, the world’s largest cryptocurrency, is also experiencing a similar trend. According to on-chain data, the amount of BTC held on exchanges has dropped to 1.3 million, or 6.3% of the total supply of Bitcoin.
24-hour price chart for Ethereum (ETH). The source: Trade view
Why should you care?
Many investors have turned to HODL instead of selling their coins in anticipation of the explosive growth of the crypto industry in 2022.