The supply of Ether on cryptocurrency exchanges has fallen to levels not seen since November 2015, prompting speculation about a potential price increase. Santiment, a cryptocurrency analysis platform, reported that Ether balances have decreased by 16.4% since January, reaching 8.97 million ETH on exchanges. This movement suggests that many investors are transferring their Ether to offline storage wallets, anticipating a rise in its value over the long term.
Historically, a significant reduction in the supply of an asset can lead to a "supply shock", driving prices up, as long as demand remains steady or increases. A similar case occurred with Bitcoin, which experienced a price increase following a decrease in its supply on exchanges. Analysts and cryptocurrency traders predict similar behavior for Ether, with expectations of an imminent "major supply shock."
Some experts, such as crypto trader Naber, suggest that the accumulation of ETH could drive its price to a range of $8,000 to $10,000, representing a 64% increase from its all-time high. However, Ether's current performance against Bitcoin has been the lowest in five years, leading to some short-term pessimism.
Despite the hope brought by the decrease in supply, Ether has fallen 26% in the last month, currently trading at $1,971. Additionally, Ether ETFs have experienced significant outflows, accumulating $370.6 million over a 12-day period. The market situation remains uncertain, with analysts divided between the possibility of a significant rebound or a prolonged decline.
