Ether Reserves on Exchanges Drop by $3 Billion Following Approval of Spot Ether ETFs
Title: $3 Billion Worth of Ether Removed from Exchanges Following Approval of Spot Ether ETFs
Since the approval of spot Ether exchange-traded funds (ETFs) in the United States on May 23, over $3 billion worth of Ether (ETH) has been withdrawn from centralized crypto exchanges. This significant movement of Ether signals a potential upcoming supply squeeze in the market.
According to CryptoQuant data, the amount of Ether on exchanges has decreased by approximately 797,000 between May 23 and June 2, equivalent to $3.02 billion. This drop in exchange reserves suggests that fewer coins are available for sale as investors opt to move their assets to self-custody for purposes other than immediate selling.
Glassnode data, shared by BTC-ECHO analyst Leon Waidmann, reveals that the percentage of circulating Ether supply held on exchanges is currently at its lowest level in years, standing at just 10.6%.
Analysts are optimistic about the impact of Ether ETFs on the market, with Bloomberg ETF analyst Eric Balchunas predicting a potential launch by late June. Some experts believe that Ether could surpass its November 2021 all-time high of $4,870 once spot Ether ETFs begin trading, driven by increased demand pressure similar to the effect seen with Bitcoin after the introduction of spot Bitcoin ETFs in January.
Unlike Bitcoin, Ether may benefit even more from demand pressures as it lacks the same level of “structural sell pressure,” as noted by DeFi report crypto analyst Michael Nadeau. While Bitcoin miners often sell BTC to cover mining costs, Ethereum validators do not face the same expenses.
However, there are concerns that Grayscale’s Ethereum Trust (ETHE), managing $11 billion in funds, could influence Ether’s price action similarly to the Grayscale Bitcoin Trust (GBTC), which experienced significant outflows following approval.
Currently, Ether is trading at $3,781, down 0.82% over the past 24 hours and approximately 23% below its all-time high. The market awaits the potential impact of Ether ETFs on the price and demand dynamics of the cryptocurrency.
