Ethereum investors have over the span of just three weeks moved over 500,000 tokens off of cryptocurrency exchanges, in outflows that represent around $1.22 billion and reduce the supply of ETH on trading platforms significantly.

According to post from popular cryptocurrency analyst Ali Martinez on the microblogging platform X (formerly known as Twitter), these withdrawals indicate “a strong Ethereum holder sentiment and potentially less selling pressure in the market.”

The Ethereum outflows from cryptocurrency trading platforms could mean users are looking to stake their ETH on-chain to generate yield from the network’s Proof-of-Stake protocol, or that they could be sending the funds to cold storage wallets to hold onto them for a longer period of time.

The funds could also be moved to be used on the decentralized finance (DeFi) space within the network, which includes lending protocols, social platforms, liquid staking protocols, and decentralized exchanges among others.

These outflows also come at a time in which Ethereum’s Dencun upgrade, which is set to significantly lower transaction costs on the network, is moving through testnets to be launched on Ethereum’s mainnet by March.

The Dencun upgrade went live on the Sepolia testnet, moving the highly anticipated proto-danksharding feature closer to reality on the network, last week. Sepolia’s implementation came shortly after the upgrade was launched on the Gorli testnet, with a final test now set on the Holesky testnet.

A key feature of Dencun is the introduction of proto-danksharding, a unique approach to data management utilizing a storage method known as “blobs.” These large data blocks of data, as explained by Ethereum co-founder Vitalik Buterin, are significantly more cost-effective than comparable volumes of calldata.

Earlier, as reported, Standard Chartered Bank predicted that the U.S. Securities and Exchange Commission (SEC) will approve spot Ethereum exchange-traded funds (ETFs) by May 23, 2024.

Last October, Standard Chartered Bank projected that Ethereum could experience a fivefold increase in its value, potentially reaching $8,000 by the close of 2026.

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