Ethereum has long been put against top crypto Bitcoin for the majority of its existence. The fact that the former possesses more use cases has led a lot of investors to believe that it will be more valuable than bitcoin in the long run. When it comes to performance, Ethereum has actually lived up to investors’ expectations of it. Outperforming bitcoin year on year for the last couple of years.

While performance metrics remain important, Ethereum has moved the competition into broader spaces. It is no secret that exchange reserves have been plummeting this year. Leading to never before seen levels in a bull market. Outflows to exchanges have far exceeded inflows, suggesting that investors are accumulating rather than selling their coins.

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In this same vein, Ethereum exchange reserves have fallen lower than that of bitcoin. Both assets have shown increasing levels of coin scarcity but metrics point to Ethereum scarcity levels being higher than that of Bitcoin.

Exchange balances of both assets relative to their circulating supply have both fallen this year. The downward trend had continued even as the market rallied due to another bull market. Currently, the exchange balances of bitcoin relative to its total circulating supply have hit a three-and-a-half-year low at 13.32%. The last time bitcoin had recorded exchange balances this low had been in 2018 when the bull market was on its last legs.

Ethereum, on the other hand, had exchange balance levels relative to its circulating supply sitting at a shockingly low 12.93%. This means that the liquid ETH supply in the market has fallen below bitcoin.

Centralized exchanges have been the hardest hit with outflows. Exchange reserves have been down not just in the top two cryptocurrencies, but also across the altcoin market.  The chart below shows a macro trend of ETH and BTC and their increased scarcity over time.

The data used to present these numbers had been taken from only centralized exchanges. Decentralized exchanges, where decentralized finance (DeFi) has thrived, were not taken into account. With so many investors taking advantage of DeFi, decentralized exchanges have seen increasing patronage of their services. Thus, this could explain why exchange balances on centralized exchanges are so low. While also showing that the liquid supply of Ethereum could, in fact, not be lower than bitcoin.

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Also, not all of the centralized exchange balances were actually taken. One prominent centralized exchange that was left out of these metrics is FTX. So this could have lead to a significant underestimate of the current exchange balance relative to liquid supply. Meaning that both bitcoin and Ethereum could have higher percentages than presented in this report.

Nonetheless, the data still shows that ETH is becoming more scarce on centralized exchanges. Leading to more scarcity on these avenues than there is for bitcoin. At the time of writing, ETH is trading at $3,366 and bitcoin continues to trade at $45,700.

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