The amount of Ethereum held on centralized cryptocurrency exchanges has dropped to its lowest level in five years, according to on-chain data from Glassnode. As of May 23, 2023, only 17.86 million ETH remained on exchanges — a figure not seen since April 2018, when the crypto market was still reeling from the aftermath of the ICO boom and bust cycle.
TL;DR
- Ethereum exchange balance fell to 17.86 million ETH, the lowest since April 2018
- Over 1.59 million ETH withdrawn from exchanges year-to-date
- The decline accelerated after Ethereum’s Merge to Proof-of-Stake in September 2022
- Bitcoin exchange balances also hit multi-year lows at 2.23 million BTC
- ETH traded at $1,854 on May 23, up 2.03% in 24 hours
A Steady Drain From Centralized Platforms
Glassnode data reveals that withdrawals from exchanges have been consistently outpacing deposits for the better part of 2023. The result has been a cumulative withdrawal of more than 1.59 million ETH from centralized platforms since the beginning of the year. This represents a significant shift in how investors are choosing to store their Ethereum holdings, moving away from exchange custodians and toward self-custody or staking solutions.
The trend of declining exchange balances did not emerge overnight. Ethereum’s presence on centralized exchanges began declining steadily from mid-2020, but the rate of decrease accelerated sharply in September 2022 following the network’s historic transition from Proof-of-Work to Proof-of-Stake, known as the Merge. The introduction of staking functionality created a powerful incentive for holders to move their ETH off exchanges and into staking contracts, where they could earn rewards while securing the network.
Bitcoin Follows a Similar Pattern
The trend extends beyond Ethereum. Bitcoin exchange balances have also been on a downward trajectory, dropping to levels not seen since March 2018 at just above 2.23 million BTC. The most dramatic decline occurred in October and December 2022, directly following the catastrophic collapse of FTX, which shattered investor confidence in centralized crypto platforms.
However, there is a notable divergence between the two assets. While Ethereum’s exchange balance has continued declining throughout 2023, Bitcoin’s exchange balance has shown signs of increasing since the beginning of the year. This could suggest that some BTC holders are re-depositing their assets in anticipation of trading opportunities, while ETH holders remain more committed to long-term holding and staking strategies.
The Staking Effect
Staked Ethereum deposits have risen to new all-time highs, further supporting the narrative that investors are choosing to participate in network validation rather than keeping their assets in cold storage or on exchanges. The shift toward decentralized solutions demonstrates the maturing nature of the Ethereum ecosystem, where active participation in consensus mechanisms is becoming the norm rather than the exception.
For the Ethereum network, this reduction in exchange-held supply has important implications for price dynamics. With less ETH readily available for trading on centralized platforms, selling pressure could be absorbed more easily, potentially supporting price levels during periods of market stress.
Ethereum Market Performance
On May 23, Ethereum was trading at approximately $1,854, reflecting a 2.03% increase over the previous 24 hours and a 2.48% gain for the week. The cryptocurrency’s market capitalization stood at $223 billion. Despite the positive daily performance, ETH remained on track for one of its weaker months in 2023, down nearly 6% for May amid broader market uncertainty driven by the US debt ceiling debate and regulatory pressures.
The declining exchange balance paints a bullish picture for Ethereum’s medium-term prospects. As supply continues to leave centralized platforms and staking deposits climb, the fundamental supply-demand dynamics increasingly favor holders. Whether this translates into sustained price appreciation will depend largely on broader macroeconomic conditions and the pace of Ethereum’s ecosystem growth.
Why This Matters
The five-year low in Ethereum exchange balances signals a structural shift in investor behavior that goes beyond short-term market movements. The post-FTX era has fundamentally altered how crypto investors think about custody, and Ethereum’s staking mechanism provides a compelling reason to hold assets off-exchange. With 1.59 million ETH withdrawn from platforms in 2023 alone and staking at record highs, the supply squeeze narrative for Ethereum continues to build. Combined with the network’s deflationary tokenomics post-Merge, this trend of declining exchange supply could become a defining feature of the next bull cycle.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.
1.59 million eth pulled off exchanges ytd and people wonder why price keeps finding support. supply squeeze is building
post-merge acceleration makes sense. staking yields beat exchange risk for most people finally
supply squeeze thesis has been building for years. at some point it actually breaks through and price discovers
gas_guzzler_ the supply squeeze thesis actually played out. ETH went from 1854 here to 4800 within 8 months. exchange drain was the signal everyone dismissed
withdrawal_wave_ calling the supply squeeze thesis confirmed at $1854 is wild. we literally watched it play out in real time and most people still traded against it
gas_guzzler_ 1.59M ETH pulled off exchanges and price barely moved. the supply squeeze thesis needs demand to actually show up. sideways for months after
17.86M ETH on exchanges is bullish but the real stat is the withdrawal velocity accelerating post-Merge. staking yields made self-custody the default
exchange balances at april 2018 levels is no joke. last time this happened we were coming off the ico collapse, very different context now
exactly. 2018 was forced selling from collapsed icos. 2023 was deliberate accumulation into self custody
Mateo R. april 2018 exchange balances were forced selling from ICO collapses. 2023 was deliberate self custody accumulation. completely different dynamics
Mateus F. good distinction. 2018 balances dropped because ICO projects were forced to sell. 2023 was voluntary self custody. opposite signals entirely
17.86M ETH on exchanges was the signal. not a price prediction, just raw supply dynamics. everyone was staring at charts while the exchange drain told the actual story
btc on exchanges also at multi year lows at 2.23m. the self custody thesis playing out across both majors
staking yields post-merge gave people an actual reason to hold off exchange. before that you were just hoping your keys were safe
Wei L. staking yields gave the first real reason to pull off exchange. before the merge you were just hoping your keys didnt get stolen. after merge you were earning 4-5%
merge_effect_ 4-5% staking yield changed the entire calculus. before the merge holding on exchange was zero opportunity cost. after merge you were leaving real yield on the table
2.23M BTC on exchanges at the same time and nobody connected the dots. both majors draining simultaneously was the biggest bullish signal of 2023
Kjeld Sorensen both majors draining simultaneously and ETH at $1854 at the time. anyone who tracked exchange balances had a 6 month head start on the run to 4800
1.59M ETH off exchanges since January but ETH price barely moved from 1854. all that supply left and still sideways. imagine if these holders actually started selling OTC
BTC exchange balances at 2.23M is the real signal. when the available float shrinks that much any demand shock goes straight to price. last time we saw these levels was pre 2018 bull run
Oleh V. exactly. people been screaming supply squeeze since 2022 merge. staking locked up millions more and still ETH went sideways for years. demand is the missing variable
17.86M ETH on exchanges in 2023 felt like a supply shock. fast forward and we are sitting at even lower levels now and price action is still sluggish. shows supply alone doesnt move markets
BTC at 2.23M on exchanges is the real story here. everyone focused on ETH but BTC supply squeeze has been even more aggressive
17.86M ETH on exchanges and price was still at 1854. proves supply drain alone doesnt move markets without demand catalyst. took 8 months and the ETF narrative for the squeeze to actually price in
supply_puzzle_ the merge changed everything. 4-5% staking yield made self-custody the rational choice. before that holding on exchange was zero opportunity cost so nobody bothered withdrawing