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Only less than 2 months left until The Merge event officially took place. However, the volume of ETH withdrawn from exchanges is at an unusually high level.
The data shows that a significant amount of ETH has been withdrawn from centralized exchanges regardless of recent times, the ETH price is seeing a steady recovery and the hashrate is down 18.21% since June 30. On July 5, there were about 25.13 million ETH in circulation on crypto exchanges. However, until now, this number has dropped sharply and is falling to about 22.77 million tokens with a value of nearly $35 billion.
The question is, is The Merge event the cause of the fear of insolvency for investors holding ETH?
On July 9, 2022, The Merge was announced to be pushed back at least until September. This event is essentially an upgrade that moves the Ethereum network from PoW to PoS. Ethereum currently operates two chains, one of which still uses PoW and one that is designed for PoS. On the same day, it was reported that 13,012,469 ETH was deposited into the ETH 2.0 contract. Since then there have been 136,416 ETH deposited into the contract and there are 410,903 validators.
On July 14, software developer and Ethereum Beacon chain community director, Superphiz, revealed a tentative date for The Merge that could take place during the week of September 19. However, the developer emphasized that that date is not yet an exact date and that the community should pay attention to official announcements.
The price of ETH and ETC in the past week has had an impressive increase. ETH was up 36.8% when the news of The Merge was announced. Against this backdrop, Ethereum’s hashrate also gained momentum, sliding below 1 petahash per second (PH/s) or 1,000 terahash per second (TH/s). As a result, computational processing power has improved, as the Ethereum network hashrate is approaching 1,000 TH/s.
Statistics for 7 days show that 2.36 million ETH has been withdrawn from exchanges since July 5, according to Cryptoquant data. ETH is following the same trend as Bitcoin, as both have been withdrawn from centralized exchanges in large numbers in recent times. The number of BTC holdings on exchanges decreased by 9.109% compared to the statistics recorded on May 22. Recent data shows that buyers and holders are also pulling large amounts of ETH out of exchanges. Data from Chainalysis indicates that:
“The amount of ETH held on exchanges is in flux. On July 21, 2022, recorded a peak of 1.82 million ETH moved in a 365-day timeframe.
Recent withdrawals are partly attributed to The Merge. In addition, investors also feel insecure because many crypto companies are in big financial trouble. In the past few weeks, 3 major companies have filed for bankruptcy and about 5 or more crypto platforms have suspended withdrawal services. Therefore, they withdraw all the tokens in the exchange’s wallet to talk about private wallets.
A typical example is individuals holding crypto on platforms like Celsius and Voyager Digital who have had their accounts frozen and cannot make crypto withdrawals. The fear of losing money to an insolvent crypto platform may have caused an unprecedented wave of withdrawals. During the first week of July, Blockfi CEO Zac Prince told the public that even though the company was not exposed to Celsius, when Celsius froze operations, it caused “a number of customers withdrawing significant increase” on the Blockfi platform.
While defaults have taken a significant toll on the entire crypto economy, crypto veterans have berated new entrants for not holding their assets in a non-custodial manner. (custody). Defaults and bankruptcies also began to appear as many people repeated the adage “not your keys, not your coins”.
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