The approval of spot Ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) on May 23 has triggered a significant movement of Ether out of centralized crypto exchanges.
According to data from CryptoQuant, over $3 billion worth of Ether, equivalent to approximately 797,000 ETH, has been withdrawn from these exchanges within a week of the ETF approvals.
TLDR
- Over $3 billion worth of Ether (around 797,000 ETH) has been withdrawn from centralized crypto exchanges since the approval of spot Ether ETFs on May 23.
- This exodus has reduced the amount of Ether on exchanges to just 10.6% of the total circulating supply, the lowest level in years.
- Lower exchange reserves imply fewer coins are available for immediate sale, as investors move their holdings to self-custody wallets.
- The approval of Ether ETFs has sparked speculation that Ether could surpass its all-time high of $4,870, similar to Bitcoin’s post-ETF price surge.
- Concerns remain about the potential impact of Grayscale’s Ethereum Trust (ETHE) on Ether’s price dynamics, given its $11 billion in assets under management.
This substantial outflow has led to a notable decrease in the amount of Ether held on centralized exchanges. Glassnode data, shared by BTC-ECHO analyst Leon Waidmann, reveals that only 10.6% of the total circulating Ether supply is currently residing on these platforms, marking the lowest level in years.
The reduction in exchange reserves implies that fewer Ether coins are available for immediate sale.
This trend suggests that investors are moving their Ether holdings to self-custody wallets, indicating a preference for holding rather than selling their assets immediately.
Lower exchange reserves typically signal tighter supply conditions, as there are fewer coins readily available for trading and selling.
This phenomenon, known as a supply squeeze, can potentially drive up prices due to increased demand pressure and limited available supply.
📉 Exchange balances for both #Bitcoin and #Ethereum are at their lowest levels in years!🔥
Whales continue to accumulate. #BTC on exchanges is down to 11.6% and #ETH is at 10.6%!
Supply squeeze incoming. 📈
Get ready for the next big move. 🚀 pic.twitter.com/u4j13DZBJk
— Leon Waidmann | On-Chain Insights🔍 (@LeonWaidmann) June 2, 2024
The approval of spot Ether ETFs has fueled speculation about the potential for Ether to surpass its all-time high of $4,870, which was set in November 2021.
Bloomberg ETF analyst Eric Balchunas has expressed the possibility of Ether ETFs launching by late June, which could further increase demand and drive prices upward.
Some analysts believe that Ether could benefit from even greater demand pressure than Bitcoin did following the launch of spot Bitcoin ETFs in January.
This prediction is based on the notion that Ether does not face the same level of “structural sell pressure” as Bitcoin. For example, Ethereum validators do not incur the same operating expenses as Bitcoin miners, who are occasionally forced to sell their BTC to cover mining costs.
Concerns have been raised about the potential impact of Grayscale’s Ethereum Trust (ETHE) on Ether’s price dynamics.
ETHE currently manages $11 billion in assets, and if it follows a similar pattern to the Grayscale Bitcoin Trust (GBTC), which saw $6.5 billion in outflows within the first month after approval, it could significantly influence Ether’s price action.
