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Compiled by: Blockchain in Plain Language
1. Increasing Scarcity of ETH: Will Supply Contraction Trigger a Price Rebound?
The supply of ETH on cryptocurrency trading platforms is becoming increasingly scarce, dropping to its lowest level since November 2015. According to the latest data, currently only 8.97 million ETH remain on trading platforms. This clearly indicates that more and more investors are choosing to hold assets rather than trade them easily.
As many holders transfer ETH to cold storage, DeFi protocols, or staking, instead of selling, confidence in the long-term value of this specific cryptocurrency is rising, thanks to changing trading trends. However, given the sharp decline in Ethereum's price in recent months, this supply shortage appears at an interesting time. Some believe market conditions and competitive pressures are weighing on ETH, while others argue that fewer coins on trading platforms may ultimately drive up the price. Now, everyone is closely watching Ethereum's next move.
2. Why is Ethereum's Supply Shrinking?
One of the main reasons for ETH withdrawal from trading platforms is the rapid expansion of decentralized finance (DeFi). More and more investors are choosing to move ETH to DeFi platforms to leverage their assets through lending, staking, or earning rewards. Many are no longer simply leaving ETH in trading platform wallets, but instead pursuing higher yield and passive income opportunities.
The emergence of staking has been a major game-changer. Since Ethereum transitioned to a Proof-of-Stake mechanism, holders can now choose to lock their cryptocurrency to support network security in exchange for rewards. Due to this significant shift, a large amount of ETH is no longer in circulation, further reducing the ETH available to investors on trading platforms.
3. Despite Reduced Supply, ETH Price Continues to Fall
Typically, a reduction in any asset's supply would drive up its price due to scarcity. However, Ethereum has defied this expectation. ETH price has dropped nearly 45% from its December high, trading at around $1,899 on March 21st. Despite reduced supply, Ethereum has been one of the weakest performing major cryptocurrencies in recent months. Multiple factors contribute to the price decline, including broader market uncertainty, shifts in investor sentiment, and increasingly fierce competition from alternative blockchain networks.
4. Analysts Adjust Ethereum Price Predictions
As market conditions continue to change, financial analysts are also adjusting their expectations for Ethereum's future. One of the world's major banks, Standard Chartered, has significantly reduced its year-end ETH price target to $4,000, down from a previous prediction of $10,000. This clearly indicates growing concerns about Ethereum's constantly evolving landscape, including increasing competition from Layer-2 solutions and rival blockchain networks.
Despite adjusted predictions, investors still maintain strong confidence in Ethereum's long-term potential. The big question now is whether new developments like staking-based ETFs or upcoming network upgrades can restore investor confidence and provide momentum for Ethereum to return to previous bullish expectations.
5. Recovery Around the Corner?
Although Ethereum has been struggling recently, several factors might help its rebound. One significant possibility is the launch of a staking-based Ethereum ETF. If regulators approve an ETF that allows institutions to directly stake ETH, it could attract a large wave of new investors. This would increase demand for Ethereum and potentially drive up its price. Currently, one of the most important things is to observe the available amount of Ethereum on trading platforms. As the number of tradable ETH Tokens decreases, some believe this "supply contraction" might lead to a price increase.
