The recent decision by Ethereum users to lock their ETH after the Merge has had a significant impact on the supply of ETH on centralized exchanges. According to data from Santiment, the amount of Ethereum on exchanges has dropped to 8.97 million ETH, the lowest supply since November 2015. This decrease in supply is reflective of the growing confidence in Ethereum’s long-term potential among investors.
One of the key drivers behind this shift in supply is the increasing interest in DeFi functions and staking rewards. Since the Merge, ETH users have been locking their tokens to take advantage of staking rewards and the added security benefits of Proof of Stake. Additionally, Ethereum’s leadership in the DeFi sector has attracted a diverse group of users engaging in activities like lending, liquidity provision, and yield farming.
This trend towards staking and DeFi activities signifies a preference among investors to actively participate in the Ethereum network rather than keeping their ETH on centralized exchanges. As a result, the supply of ETH on exchanges has decreased by 16.4% over the past seven weeks, the largest drop since late 2024. This decline underscores the growing confidence in Ethereum as a yield-generating asset rather than just a trading instrument.
The outflow of ETH from exchanges suggests that holders anticipate an increase in Ethereum’s value, supporting a bullish long-term outlook. The limited availability of ETH on exchanges could drive prices higher due to scarcity at stable demand levels and lead to increased volatility in the market. Overall, the continued migration of Ethereum from centralized platforms highlights the strong network confidence and reinforces bullish sentiment for the cryptocurrency.
As DeFi and staking continue to attract more capital, Ethereum’s position as a valuable long-term asset is strengthening within the evolving crypto market landscape. This shift towards DeFi and staking activities signifies a broader trend towards active participation within the Ethereum network, highlighting the platform’s long-term sustainability and growth potential.
