<p class="is-style-lead">Ethereum (<a href="https://crypto.news/price/ethereum/">ETH</a>) balances on crypto exchanges have plunged to a five-year low, triggering speculation on its future price action.</p>



<p>Intriguing developments have always marked the ebb and flow of the crypto market, and this week is no exception. </p>



<p>The show&#8217;s star is ether, the world&#8217;s second-largest cryptocurrency, quietly making headlines due to an intriguing phenomenon – its balance on exchanges is nearing an all-time low. </p>



<p>The question on everyone&#8217;s mind is: what could this mean for the future of ETH?</p>



<p>Data from Glassnode paints a compelling picture. As of May 26, out of the total ETH supply of 120.26 million, a mere 16.64 million is present on centralized exchanges, suggesting that 86% of the ETH supply is lying dormant.</p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="4287" height="2700" src="https://crypto.news/app/uploads/2023/05/Ethereum-Exchange-Reserve-All-Exchanges1.png" alt="Ethereum&#039;s exchange holdings plunge to 5-year low - 2" class="wp-image-14161923"><figcaption class="wp-element-caption">Lifetime chart of ETH exchange balance | Source: <a href="https://cryptoquant.com/asset/eth/chart/exchange-flows/exchange-reserve?exchange=all_exchange&amp;window=DAY&amp;sma=0&amp;ema=0&amp;priceScale=log&amp;metricScale=linear&amp;chartStyle=line" target="_blank" rel="noopener">CryptoQuant</a></figcaption></figure>



<p>This marks a drastic decrease from 2021&#8217;s bull market, during which the exchange balance was around 25-26%. This trend seems to suggest a bullish sentiment, as a limited supply drives prices upwards.</p>



<h3 class="wp-block-heading" id="staking-craze-the-power-of-passive-income">Staking craze: the power of passive income</h3>



<p>One of the significant contributors to this phenomenon is the growing popularity of ether <a href="https://crypto.news/what-crypto-staking-work-make-profit/">staking</a>. Millions of additional coins have been staked thanks to the recent Shapella upgrade to the Ethereum network. </p>



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<p>This move has resulted in a significant chunk of the ether supply being absorbed from the market, creating a supply crunch. This increasing interest in staking is primarily due to large ether holders&#8217; preference for generating passive income rather than liquidating their assets.&nbsp;</p>



<h3 class="wp-block-heading" id="ethereum-s-recent-upgrades-fuel-the-exodus">Ethereum’s recent upgrades fuel the exodus</h3>



<p>Another crucial factor is Ethereum&#8217;s recent upgrades. Following the introduction of the <a href="https://crypto.news/vitalik-buterin-the-merge-improved-ethereum/">Merge upgrade</a>, which transitioned Ethereum to a proof-of-stake (PoS) <a href="https://crypto.news/proof-of-work-vs-proof-of-stake-which-has-the-more-profitable-projections/">consensus</a> mechanism in September 2022, the rate of decline in ETH exchange reserves has accelerated.</p>



<p>Further fuelling the exodus is the <a href="https://crypto.news/eth-price-analysis-where-is-ethereum-headed-after-shanghai-update/">Shanghai upgrade</a> implemented on April 12, which has boosted ethereum staking even more. Staking rewards data reveals that approximately 18.91 million ETH worth $34 billion is currently staked on various platforms.</p>



<h3 class="wp-block-heading" id="impact-on-eth-price-will-it-soar-or-plunge">Impact on ETH price: will it soar or plunge?</h3>



<p>Historically, low exchange reserves suggest less selling pressure and a bullish momentum, potentially driving ETH prices higher. The recent stats support this speculation; the ETH price has increased by 2% in the past 24 hours, trading above the $1800 level.</p>



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="813" height="570" src="https://crypto.news/app/uploads/2023/05/image-82.png" alt="Ethereum&#039;s exchange holdings plunge to 5-year low - 3" class="wp-image-14161922"><figcaption class="wp-element-caption">ETH 24-hour price chart | Source: <a href="https://coinmarketcap.com/currencies/ethereum/" target="_blank" rel="noopener">CoinMarketCap</a></figcaption></figure>



<p>Moreover, ether’s decreased volatility and declining trading <a href="https://crypto.news/glossary/volume-in-crypto-trading/">volumes</a> since the upgrade have brought stability to ETH prices. However, the question remains, will this stability persist, or are we on the brink of a price explosion?</p>



<p>Only time will tell whether this all-time low balance on exchanges leads to a bullish run or introduces an unexpected twist. As always, stay tuned for more exciting developments.</p>



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Ethereum’s exchange holdings plunge to 5-year low

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