Ethereum, the second-largest cryptocurrency, has recently reached a new high in terms of the flow of ETH deposits to exchanges, according to a tweet from Santiment on-chain data aggregator.
The team of analysts at Santiment is investigating the cause of this surge in active deposits, but they believe it could signify increased volatility for the price of Ethereum in the near future. This has been observed in the past, such as during the integration of the Merge upgrade in mid-September last year or the collapse of FTX in November 2022.
Despite declining from a peak of $1,930 on April 30, Ethereum is currently trading at $1,898. This can be attributed to the mechanism introduced in 2021 with the London hard fork, which allows Ethereum developers to burn ETH, reducing the coin’s circulating supply and making it more scarce.
This, in theory, can allow the price to go up. Since September 15 last year, when The Merge was implemented, developers have managed to destroy 153,265.34 ETH, equivalent to $291,175,025.
The increased activity on the Ethereum network may also be due to the “meme coin season,” as developers and communities of such meme cryptocurrencies as SHIB have been actively burning coins in the billions. These meme cryptos are built on Ethereum, resulting in more transactions.
Investors have been actively depositing ETH to crypto exchanges, with nearly 9,200 unique ETH deposits taken in by exchanges, the highest amount since September 15 last year. While the cause of this surge is yet to be determined, it will likely result in increased volatility for the price of Ethereum in the coming days.
