ether (ETH), the second largest cryptocurrency by market cap, has seen a steady decline in exchange supply for the past six months post-merger. The Ethereum network underwent a major upgrade in September 2022, going from a proof of work (PoW) to proof of stake (PoS) network in a event called Merge.
According to on-chain data shared by cryptanalysis firm Santiment, the amount of ETH available on exchanges continues to fall. Since the Merger, there is 37% less ETH on the exchanges. A steady decline in supply on exchanges is considered a bullish sign, as there is less ETH available to trade or sell.
There was a total of 19.12 million ETH, worth $31.3 billion, in trades in September prior to the Merger. The number has now decreased to 13.36 million ETH, worth $19.7 billion, in the second week of February.
A significant part of the ETH supply is moving to self-custody, while many traders are also preferring to stake with the Shanghai update just around the corner. Shanghai, the next Ethereum upgrade, is scheduled for March. The Shanghai hard fork will integrate more improvement proposals for network improvements and allow participants and validators to withdraw their shares from the Beacon Chain.
Currently, 16 million ETH, or 14% of the total supply, is staked on the Beacon Chain, which amounts to approximately $25 billion at current prices, a considerable amount that will gradually become liquid after the Shanghai hard fork. .
Related: What's in and what's out for Ethereum's Shanghai Update
In addition to a steady decline in the supply of ETH on exchanges, the overall ETH market supply has also declined since went deflationary after london update. The deflationary model comes from a fee-burn mechanism introduced via the Ethereum Improvement Proposal (EIP)-1559.
A total of 2.9 million ETH has been burned since the London update in August 2021, whose current value is estimated at $4.5 billion.
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