Traders Withdraw USD 3.6 Billion in a Hurry from Ethereum

Traders Withdraw USD 3.6 Billion in a Hurry from Ethereum

The preliminary date for The Merge, revealed by the Ethereum developer Superphiz, is less than two months away, and the announcement has seemingly caused several developments. The native token, ether, has seen a significant spike in value, and the hashrate has dropped to 18.21% since June 30. Data also shows that the amount of Ethereum stored on exchanges has seen a massive drop. An estimated 25.13 million ether was once held on exchanges on July 5, and today there are only 22.77 million ether worth close to USD 35 billion.

Ethereum Held on Exchanges Has Plummeted Significantly

On July 9, 2022, Bitcoin.com News reported on the delayed difficulty bomb and the fact that The Merge would be pushed back at least until September. The Merge is the upgrade that finally transitions the Ethereum (ETH) network from proof-of-work (PoW) to proof-of-stake (PoS).

There are two chains: one that leverages PoW and the other is the Beacon chain, which is designed for PoS. It was reported that 13,012,469 ETH was deposited into the ETH 2.0 contract. Since then, 136,416 ether has been deposited into the contract and there are 410,903 validators.

On July 14, software developer and Ethereum Beacon Chain Community Director, Superphiz, revealed the possible date for The Merge, and the timeline noted it could take place during September. However, the developer said that the date was not final and that the community should pay attention to official announcements.

Since then, ETH has managed to gain 36.8% against the U.S. dollar in 30 days, as The Merge strengthened the smart contract platform token’s price. Amid the price rise, Ethereum’s hashrate dropped as well, sliding below the 1 petahash per second (PH/s) or 1,000 terahash per second (TH/s) region. The computational processing power has improved since then, as the Ethereum network’s hashrate is coasting along at 1,000 TH/s.

The seven-day data further reveals that 2.36 million ethers have been removed from cryptocurrency exchanges since July 5, according to cryptoquant.com. Ethereum has been following the same trend as bitcoin (BTC), as both crypto assets have been pulled off centralized exchanges in great numbers in recent times.

Recent data shows that Ethereum buyers and holders are pulling large quantities of ether off exchanges as well. Data from Chainalysis indicates that the "change in [ethereum] held on exchanges in the last day is 1.82M [ethereum], the highest level in over 365 days."

The Merge or Insolvency Fears?

While the most recent withdrawals could be attributed to The Merge, crypto investors have been removing large quantities of funds from exchanges due to crypto companies in major financial trouble. During the last few weeks, three major crypto firms filed for bankruptcy, and roughly five or more crypto-asset platforms have halted withdrawals.

Individuals who held crypto assets on platforms like Celsius and Voyager Digital, for instance, saw their accounts frozen. Fear of losing funds to an insolvent crypto platform has caused a wave of withdrawals. During the first week of July, Blockfi’s CEO, Zac Prince, revealed that while the company had no exposure to Celsius when Celsius froze operations, it caused a significant "uptick in client withdrawals" on the Blockfi platform.