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Ethereum Supply Shock Grows As Reserves Decrease, ETH 2.0 Contract Increases

The Ethereum supply shock has been growing as exchange reserves continue to decrease and value staked in ETH 2.0 contract rises.

Ethereum Supply Shock: Exchange Reserves Go On Decreasing While ETH 2.0 Staking Contract Grows In Value

As pointed out by a CryptoQuant post, ETH exchange reserves have been decreasing while the coins locked in the staking contract have been rising.

The “all exchanges reserve” is an Ethereum indicator that highlights the total number of coins stored in wallets of all exchanges.

When the value of this metric goes up, it means there is an increase in the supply of ETH on exchanges. Such a trend may show that there is a selling pressure in the market as investors are sending these coins to exchanges for withdrawing to fiat or altcoin purchasing.

A decrease, on the other hand, would imply the supply of ETH is going down as investors take their crypto off exchanges for hodling or selling through OTC deals. This behavior may show that buyers feel bullish on the coin’s future.

Related Reading | Only In Crypto: A Croissant Lists Potential Bullish Drivers For Bitcoin And Ethereum In Q4 2021

Now, here is a chart that shows the trend in the all exchanges reserve for ETH:

The indicator's value looks to be decreasing while ETH 2.0 total value staked is moving up | Source: CryptoQuant

As the above graph shows, the Ethereum exchange reserves have been steadily heading downwards since quite some time now.

This is despite ETH’s recent sharp increase in price. It seems investors are willing to hold on as they believe the price will appreciate even further.

Related Reading | TA: Ethereum Outperforms Bitcoin, What Could Extend Gains Above $4K

This is creating a supply shock in the market. An increase in demand from big whales like institutional and retail investors now can blow the price up.

In fact, on-chain data suggests institutional investors have already started getting in...

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