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How much Ethereum is locked? Data has revealed that 37% of circulating ETH is now locked in smart contracts, with the % of Ether locked hitting its highest level in 2 years, but what does this mean for Ethereum price?
The latest Glassnode data has sent a shockwave through the market, after showing that over 37% of all circulating Ethereum (ETH) is, in one way or another, locked in smart contracts; the highest level in roughly two years.
💥#ETH in SMART CONTRACTS just blasted past 37%!
Holders are locking in more Ether, not cashing out.🔒
At the same time, exchange reserves are plunging.
Scarcity squeeze in the making!#Ethereum is gearing up for a moonshot.🚀🌕 pic.twitter.com/M67BdvlpQk
— Leon Waidmann | On-Chain Insights🔍 (@LeonWaidmann) April 1, 2024
This uptick suggests a growing appetite for decentralized finance (DeFi), non-fungible token (NFT) minting, and more. All these activities are possible on Ethereum, the legacy smart contracts platform, and the largest by total value locked (TVL).
Recent months have seen Ether strengthen on a fundamental level following the successful implementation of the Dencun Upgrade. Now, with market anticipation for a potential spot ETH ETF in May growing, Ethereum’s staking has hit record highs.
Ethereum Price Analysis: More ETH Locked By Smart Contracts But Prices Under Pressure
The fact that Ether holders are opting to lock their ETH up in smart contracts and not trade or engage with centralized exchanges may be seen as a bullish development for the coin.
Usually, the more coins are moved away from exchanges, the more bullish it is for prices, and it also signals growing investor confidence in ETH’s value proposition across the next year.
This development is a net positive for ETH, coming at a time when the coin is under immense selling pressure. As of April 2, ETH is changing hands below $3,500.
(ETHUSDT)
The coin is down 6% in the past 24 hours alone, finding rejection from last week’s highs of around $3,700. Technically, sellers are in a commanding position. After posting 2024 highs of $4,090, the upside momentum has fizzled despite key developments, especially the activation of Dencun.
In the past few months, the TVL of DeFi protocols has been expanding. At the depth of the bear market in 2022, it dropped below the $40 billion mark. However, as ETH prices recovered throughout 2023 and early 2024, the TVL is now at over $94 billion.
According to DeFiLlama data, Lido Finance, EigenLayer, and Aave currently manage over $32 billion, $11.9 billion, and $10.7 billion, respectively.
Analysts also note the decline in ETH reserves across leading exchanges like Coinbase and Binance. With less ETH readily available for purchase, a “scarcity squeeze” could be brewing, driving the price up due to limited supply.
The Bottom Line: Markets Await Spot ETH ETF, But Vitalik Awaits The “Purge”
Meanwhile, Vitalik Buterin, the co-founder of Ethereum, has proposed more enhancements for the blockchain dubbed “The Purge.”
At this stage, the focus will be on further streamlining the network and reducing workload, especially for the network’s nodes. To do this, the developer said the code would be removed and the “empty accounts” issue addressed.
A quick note on next steps in Ethereum protocol simplification and node resource load decreases (aka "the Purge"):https://t.co/BAebCGrisB
— vitalik.eth (@VitalikButerin) April 1, 2024
A key element is the implementation of EIP-6780, introduced during the recent Dencun hard fork. This improves security and simplifies protocol execution.
Explore: Why is Bitcoin Down Today? Here’s 2 Reasons Why Bitcoin And Crypto Prices Are Falling
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
