Ethereum (ETH) is flowing out of exchanges, with less coins now locked in custody. The asset shifted its use cases to decentralized finance (DeFi). Additionally, exchanges also shifted their dominance, with multiple market operators ousting US-based traders.
TokenAnalyst noticed significant exchange outflows, either moving to other markets or to other investment schemes.
For ETH, there were several repercussions. Initially, a lot of ETH was stored on exchanges, while its value was low. After the price boom in 2017, more ETH was stored, or went into ICO projects.
The slide in Poloniex volumes also meant less ETH was held with the exchange. ETH activity also shifted to a wider number of exchanges, with significant net inflows into Binance. Bitfinex has also expanded its storage of ETH, as well as Kraken.
As ETH still keeps up its market price, it is seen as one of the more liquid, highly valuable assets. Currently, ETH is also used within crypto lending schemes, and Maker DAO often collects more than 2 million ETH.
The top addresses in the ETH rich list still belong to exchanges. But among the top 10 is also the Plus Token Ponzi, still having a wallet with 789,534 ETH.
The current block production, which adds 2 ETH every minute, is also diminishing the inflation on the network. Mining is also slowing down due to creeping difficulty, and new ETH may be scarce.
ETH is seen as potentially staging a stronger rally, to bounce off its currently stagnant levels. ETH trades at $145.24, after another market downturn on Wednesday, and so far has not recovered the levels above $180. But ETH is seen as potentially triggering the eventual altcoin season.
Still, ETH is at a crossroads. The network is hosting some of the most highly active dApps, though still threatened by congestion. At the same time, the scalability promised has not arrived yet, and Ethereum has not yet moved to staking. In the case of proof-of-stake block creation, more of the coins would have to be locked in nodes.