🌎 Bitcoin and Ethereum Exchange Balances Hit Four-Year Low

Bitcoin and Ethereum user balances have dropped to levels not seen since 2020. Recent data revealed that user balances of Bitcoin (BTC) and Ether (ETH) on centralized exchanges have reached a four-year low as investors held out for higher prices in a bull market.

BTC balances dipped to below 2.3 million coins, valued at around $160 billion, while ETH balances have dropped below 16 million, amounting to less than $59 billion.

Why Bitcoin and Ethereum Exchange Levels Dropped

The amount of BTC and ETH on exchanges has been in a downtrend since before July 2020. Data confirmed that users continued to withdraw assets from these platforms following the pandemic, through the 2021 peak, during the 2022 Terra-FTX contagion, and even after spot BTC ETFs were approved.

This four-year pattern suggests that crypto users have adopted a bullish long-term outlook, expressing confidence in the future appreciation of these assets regardless of market cycles.

After the COVID-19 crisis in 2020, inflation also affected global economies, incentivizing investors to allocate capital into technologically sound vehicles. Bitcoin’s hard-capped supply and immutable design bolstered its status as an inflation hedge, and some sovereign nations have adopted the cryptocurrency as legal tender.

The bullish thesis is perhaps reinforced as institutional demand surged through spot BTC ETFs, driven by major Wall Street players. Companies like MicroStrategy have also invested billions in Bitcoin, driven by a strong belief in its future potential.

As the second-largest cryptocurrency and top altcoin, ETH commands its own bullish thesis as the leading substitute for BTC. The token powers the largest decentralized finance (DeFi) ecosystem, which is worth nearly $70 billion.

In 2020, developers launched the Beacon chain, marking the beginning of Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS). This move unlocked Ether staking, a process of locking up ETH for network security and passive yield.

Currently, over 27% of Ethereum’s supply is staked. Users have deposited over $119 billion worth of ETH in staking providers. The excitement around spot ETH ETF approvals, DeFi growth, and staking surges has contributed to a positive outlook for the cryptocurrency, encouraging users to hold on for dear life, commonly known in the crypto community as “hodl.”