Bitcoin and Ethereum balances on exchanges have plummeted to levels not seen since 2020, according to data from Glassnode. This drop in user balances for Bitcoin (BTC) and Ethereum (ETH) on centralized exchanges indicates a four-year low as investors opt to hold onto their assets in anticipation of higher prices during the current bullish market.
The number of BTC and ETH on exchanges has been steadily declining since before July 2020, as confirmed by Glassnode data. Users have been consistently withdrawing their assets from these platforms following the onset of the pandemic, through the peak of 2021, amidst the 2022 Terra-FTX contagion, and even after the approval of spot BTC ETFs.
This four-year trend suggests that cryptocurrency users have embraced a positive long-term outlook, showing confidence in the future growth of these assets regardless of market fluctuations. In addition to the impact of the COVID-19 crisis in 2020, global inflation has prompted investors to seek refuge in technologically advanced assets. Bitcoin’s limited supply and secure design have solidified its position as a hedge against inflation, with countries like El Salvador adopting it as legal tender.
The bullish sentiment has been further supported by the involvement of major Wall Street players such as BlackRock and Fidelity, who have driven institutional demand through spot BTC ETFs. Companies like MicroStrategy, led by Bitcoin advocate Michael Saylor, have also allocated significant funds to the primary digital asset.
As the top altcoin and second-largest cryptocurrency by market capitalization, Ethereum presents its own optimistic outlook as the leading alternative to Bitcoin. With its significant role in the decentralized finance (defi) ecosystem valued at nearly $70 billion, ETH continues to attract user interest.
The launch of the Beacon chain in 2020 marked the beginning of the transition from proof-of-work (PoW) to proof-of-stake (PoS) for Ethereum. This transition enabled Ether staking, a process in which users lock up ETH for network security and passive income. Currently, over 27% of Ethereum’s supply is staked, representing a value of over $119 billion deposited into staking providers like Coinbase, Lido, and EigenLayer.
The excitement surrounding the approval of spot ETH ETFs, the growth of defi, and the surge in staking activity has contributed to a positive outlook for Ethereum. This has encouraged users to adopt a “hodl” mentality, holding onto their assets for the long term despite short-term price fluctuations.