Post-Merge Ethereum Supply Drops 37% On Crypto Exchanges
The drop in exchange supply is positive weeks before the Shanghai upgrade.
Over the past six months after Merge, exchange supply for Ether, the second-largest cryptocurrency by market size, has steadily declined. In September 2022, the Merge upgraded the Ethereum network from PoW to PoS.
Santiment’s on-chain data shows that exchanges are losing ETH. The Merge reduced exchange ETH by 37%. Since exchanges have less ETH to sell, a steady fall in supply is optimistic.
In September before the Merge, exchanges had 19.12 million ETH valued $31.3 billion. In the second week of February, the figure dropped to 13.36 million ETH, worth $19.7 billion.
With the Shanghai upgrade approaching, many traders prefer staking and ETH is being put into self-custody. Shanghai, Ethereum’s March update, Stakeholders and validators can withdraw their Beacon Chain holdings after the Shanghai hard fork.
After the Shanghai hard fork, 16 million ETH, 14% of the entire supply, will become liquid on the Beacon Chain, worth $25 billion at current prices.
Since becoming deflationary after the London upgrade, ETH’s market supply has dropped along with exchange supply. Fee-burning in Ethereum Improvement Proposal (EIP)-1559 created the deflationary concept.
Since the August 2021 London upgrade, 2.9 million ETH has been burnt, worth $4.5 billion today.
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