There are now far less eth available on price setting exchanges than a year ago according to blockchain analytics.
Last year, 24.1% of ethereum’s total supply was on exchanges in September 2020, translating to some 28 million eth, or $86 billion.
As of Sunday, however, 16.1% of eth’s total supply was on exchanges, or 18.8 million eth, worth $58 billion at the current price.
Some 10 million eth thus has been withdrawn from exchanges tracked by Santiment to their cold wallets or perhaps to dexes and defi over twelve months.
The more hostile environment in China may have partly pushed users there towards decentralized exchanges and dapps, with about 1% of the total supply withdrawn in just the past month.
That’s about 1.1 million eth, worth $3.4 billion, but the withdrawal from exchanges has been gradual and consistent over the year, so it is unlikely any one event or reason can explain it.
It may well be that there have been many new long term buyers who rather than hold it on exchanges, have withdrawn the asset to cold wallets.
Also older buyers now have far more options than sending the eth off to exchanges. They can collateralize it to borrow dai, getting the USD stablecoins while paying no taxes as technically it is borrowing.
They can do the same but borrow Curve instead, and lock that to boost it up on yearn with the carding possibilities almost endless.
The price may go against them however, but presumably that would be a tax loss while they still have the tax free dai with the complexity here only up.
So the days when you sent your tokens to some exchange in Tokyo in the hope that maybe one day you’ll get the dollar check are now perhaps for the lazy or for casuals and for simple exits as things like defi are more and more keeping crypto value within crypto, rather than letting it go off to fiat.
The plunge in exchanges thus kind of coincides with the defi summer last year and its continued growth to now 7.8 million eth.