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Crypto shortage on exchanges could announce a new rally

Photo of: Nathan VDH
by Nathan VDH

The strong demand for cryptocurrencies could result in limitations on transactions, particularly on eToro. On the Ether side, exchange reserves are at their lowest level since 2018, a sign of an upcoming increase.
The strong demand for Bitcoin is driving up prices. If the cryptocurrencies experienced this week the biggest crash in its history in terms of value, the BTC is once again approaching $40,000.

But the queen of crypto is not the only one under pressure. This is also the case for Ether, the 2nd largest cryptocurrency in capitalization. And ETH could soon reach its highest historical level (ATH).

This is what a major indicator suggests. It is the level of the token reserves of the exchanges. According to data from CryptoQuant, the centralized exchanges hold only 8.1 million ETH.

What is there to look forward to, however? Yes, except that within two days, these reserves were down by 27%. According to expert Alex Saunders, these stocks could be exhausted in the next few days.

This is a far cry from the levels of May-2020, when the exchanges still held 14.1 million Ether. And Glassnode also confirms this trend. The company points out that in order to find such a low reserve level, one has to go back to July 2018.

As a result, only 7% of the Ether in circulation is currently present on the exchanges. What conclusions can be drawn from this? For some, the imminence of a powerful bull-run. Clearly, a strong increase in the price of ETH.

Bitcoin was in the same situation, with low liquidity on the exchanges. The result was a surge in the price of the asset, which even had the luxury of crossing the $40,000 mark. However, the entire cryptocurrencies market is now under pressure.

And this could force exchanges to impose restrictions on their users. This is notably the case of eToro, which warned its customers of possible limitations on purchases as early as this weekend. Due to the lack of liquidity in the market, eToro believes it may have to limit purchases of Bitcoin and other cryptocurrencies.