Bitcoin and Ethereum user balances have dropped to levels not seen since 2020 according to Glassnode data. Both BTC and ETH balances on centralized exchanges have reached a four-year low as investors wait for higher prices in a bullish market. BTC balances are now below 2.3 million coins, valued at around $160 billion, while ETH balances have dropped below 16 million, amounting to less than $59 billion.
The trend of decreasing BTC and ETH balances on exchanges has been ongoing since before July 2020, with users withdrawing assets following events like the pandemic, the 2021 peak, the 2022 Terra-FTX contagion, and the approval of spot BTC ETFs. This suggests that crypto users have a bullish long-term outlook, showing confidence in the future appreciation of these assets regardless of market cycles.
The COVID-19 crisis in 2020 and global inflation have led investors to seek out technologically sound investments. Bitcoin’s limited supply and strong design have positioned it as an inflation hedge, with countries like El Salvador adopting it as legal tender. Institutional demand has also increased through spot BTC ETFs and companies like MicroStrategy investing billions in BTC.
As the top altcoin, ETH has its own bullish thesis as the leading substitute for BTC. It powers a significant decentralized finance ecosystem worth nearly $70 billion and the transition to proof-of-stake has unlocked ETH staking, with over 27% of Ethereum’s supply currently staked. The approval of spot ETH ETFs, growth in decentralized finance, and staking surges have contributed to a positive outlook for the cryptocurrency, encouraging users to “hodl” their assets.