Investors withdrew $2.5 billion from the exchanges in Ethereum in two days, the reserves of trading platforms decreased by 20%, to 8 million ETH. Users have been actively withdrawing coins from the platforms for more than six months, for which there are several reasons
Over the past two days, there has been a sharp decline in Ethereum reserves on crypto exchanges. According to the service ReyCrypto.com during this period, users withdrew about 2 million coins from trading platforms, at the current exchange rate it is almost $ 2.5 billion. The reserves of the platforms decreased by 20%, to 8 million ETH.
Users have been withdrawing Ethereum from exchanges since the summer. Then the reserves of trading platforms were 13-14 million coins. This indicator fell as the price of the altcoin rose. Since the summer of last year, ETH has risen five times to $1,250 per coin., and the stock of the asset on the exchanges has decreased by almost 40%.
There may be several reasons for this dynamic. The first is the actual strengthening of Ethereum. Many investors who buy cryptocurrency for a long time prefer not to store it on exchanges, but to transfer it to cold wallets. This is done for security purposes, as trading platforms can be hacked.
Concerns of users about the hacking of exchanges probably intensified in late summer. At that time, incidents occurred at several sites that could undermine investor confidence and become the second reason for speeding up the process of withdrawing assets from the exchanges.
First, unknown persons withdrew $280 million from a large trading platform KuCoin, at the same time, a small exchange Etherbase was hacked. Then another popular exchange, OKEx, turned off withdrawals without warning. Users could not pick up assets for more than a month.
The third factor contributing to the withdrawal of Ethereum from the exchanges could be the growing popularity of the decentralized finance sector (DeFi). It includes various services that, among other things, allow you to passively receive income from cryptocurrency, providing it as liquidity. This works by analogy with a bank deposit — the investor transfers capital to the platform and receives interest on it.
The fourth factor could be the launch of the zero phase of the second version of Ethereum. In December 2020, the developers launched the Ethereum 2.0 deposit contract. Now investors can transfer their coins to it and passively increase their number by stacking, which works similarly to deposits. The annual return on stacking at the moment is about 10%, excluding costs. As of January 15, users transferred more than 2.5 million ETH to this contract, according to the ReyCrypto data.