The amount of Ethereum (ETH) being held on cryptocurrency exchanges has recently plunged by around $750 million after massive withdrawals of the second-largest cryptocurrency by market capitalization from these platforms.
According to on-chain data from on-chain analysis firm CryptoQuant shared by popular cryptocurrency analyst Ali Martinez, 300,000 ETH tokens worth approximately $750 million were withdrawn from exchanges in a single week.
A smaller supply of Ethereum on cryptocurrency exchanges is often interpreted as a bullish sign, as if demand remains steady or rises it could lead to price rises. Often, funds are moved off of exchanges so holders can custody their own funds to keep them for the long-term.
Ethereum holders may also move their funds off of exchanges to stake their funds on the network in a bid to earn a yield on their holdings through the network’s Proof-of-Stake consensus mechanism.
Meanwhile, market intelligence platform IntoTheBlock has revealed that Ethereum’s Market Value to Realized Value (MVRV) ratio, which compares the current market value of Ethereum to its realized value, currently sits at 1.25, suggesting the average Ethereum holder is currently in a state of profit.
The MVRV indicator, according to IntoTheBlock, helps “identify points of extreme market sentiment—whether assets are trading above or below what most investors paid for them.” A high MVRV suggests an asset is overvalued, while a lower reading indicates undervaluation.
According to the firm, historical data shows Ethereum has “bottomed out when MVRV dips below 1, as it indicates capitulation among investors and a favorable accumulation phase.”
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