According to a recent report by Kaiko, a digital assets data provider, it has been revealed that 72% of Ethereum liquidity is concentrated within five major cryptocurrency exchanges. These exchanges, namely Binance, Bitfinex, OKX, Coinbase, and Kraken, hold a significant portion of the liquidity for ETH, while the reserve wallets of 41 other exchanges only account for 28% of Ethereum's liquidity.
This high level of concentration among a few exchanges has raised concerns among analysts, as it is an unusually large proportion. Kaiko suggests that the liquidity shift towards these exchanges can be attributed to the collapse of FTX, a significant event in the crypto market. Since then, there have been limited positive developments regarding liquidity for crypto assets.
Furthermore, Kaiko points out that liquidity is moving away from the United States, with the country's share of market depth dropping from a peak of 54% in May 2022 to around 40% currently. The data provider speculates that liquidity consolidation may continue, not only for Ethereum but for all assets, within a small number of exchanges.
In addition to the liquidity concentration, the report briefly discusses the state of stablecoins in the crypto market. It highlights that the two largest stablecoins, USDT and USDC, have been trading at a slight premium and have exhibited little volatility. Kaiko also notes that stablecoin prices have remained unaffected by the ongoing discussions about the U.S. debt ceiling negotiations, indicating that they have reached a state of stability and safety.
Meanwhile, Ethereum balances on exchanges have reached a five-year low, suggesting that investors have confidence in the asset's growth. Currently, around 17.882 million ETH, equivalent to 14% of the total supply, is held on centralized exchanges. At the same time, staked ETH deposits have reached a new all-time high, propelled by Ethereum's Shapella upgrade, which enabled the unstaking of ETH and contributed to increased adoption and prices. Presently, Ethereum is trading at approximately $1,900.
