- Crypto analyst Croissant looks at a few factors which could propel Ethereum higher.
- A large majority of ETH tokens are held in smart contracts.
- The supply of ETH on major exchanges is almost hitting a three-year low.
Ether, the world’s second-largest cryptocurrency by market cap has offered some of the industry’s best returns over the past year, making it worth over ten times its lowest price in March 2020’s crypto market crash.
Looking at Ethereum’s on-chain data, there are multiple positive developments that suggest bullish market sentiments, according to popular crypto analyst behind the Croissant handle on Twitter.
Smart Contract Holds 26% of ETH Supply
Croissant outlines several factors revolving around Ethereum’s network development and application that will push Ethereum to the top as the world’s most valuable asset.
From an initial total supply of 72 million Ether at launch time in 2015, Ethereum now has over 135 million unique addresses and 118 million ETH in circulation.
“The Ethereum blockchain began in 2015, offering 72M $ETH to over 10,000 #Bitcoin addresses who participated in the ICO. Fast forward to today, there is now 118M $ETH from block rewards across 135,734,686 recorded wallet addresses.”
According to the analyst, out of the total ICO participants, only 81% have one percent of their initial balance. Approximately 9.5% are dormant, which means all the initial tokens sent to these addresses could be lost forever while only 64% have increased their ETH holdings.
Ethereum smart contracts now hold 26.86% of the total ETH supply or approximately $143 billion worth of ETH that is powering the largest DeFi ecosystem in the world. The amount of Ether on DeFi applications represents 26.67% of all the total circulating supply.
“These are decentralized applications that power virtual economies, stable coins, and many other things home to Ethereum. of that, 26.86 in smart contracts, 77% is locked in DeFi.”
Ethereum on Exchanges continues to hit new lows
Blockchain data and intelligence provider Glassnode noted that the recent Ethereum rally has been due to the massive outflow of ETH from centralized exchanges to cold wallets.
Ether’s balance on exchanges has hit a low of just 14.2 million ETH, representing a 5% decrease from 17% in 2020 to around 12% of the total ETH supply in 2021.
“Low exchanges balance that investors do not have any plans to sell, driving illiquidity and volatility further into the mix.”
50% of ETH hasn’t moved in a year
In addition to DeFi, a lot of ETH is dormant in staking protocols. 50% of ETH have not changed hands for at least a year. This means the majority of Ether investors prefer to hold their coins. Only 20% of the Ethereum supply is said to be active.
The analyst concluded that investors are shifting from the conservative mindset of buying ETH for speculative trading to buying ETH for utility use cases.
“We are very quickly moving from the mindset of “I buy ETH because it appreciates,” to the mindset of “I buy ETH to do things.”