Since the approval of spot Ether exchange-traded funds (ETFs) in the U.S. on May 23, over $3 billion worth of Ether has exited centralized crypto exchanges. This significant withdrawal hints at a potential upcoming supply squeeze, impacting Ether’s market dynamics.
Data from CryptoQuant reveals that the amount of Ether on exchanges dropped by approximately 797,000 between May 23 and June 2, equivalent to $3.02 billion. This decline indicates that investors are moving their Ether to self-custody, reducing the immediate selling pressure on exchanges.
Supporting this trend, Glassnode data analyzed by BTC-ECHO’s Leon Waidmann shows that the circulating Ether supply held on exchanges is at a historic low of 10.6%. This reduction in exchange reserves points to fewer coins available for sale.
Bloomberg ETF analyst Eric Balchunas predicts a strong likelihood of Ether ETFs launching by late June. Analysts suggest that this could drive Ether to surpass its November 2021 all-time high of $4,870, akin to the demand surge seen with Bitcoin’s spot ETFs launch in January.
Unlike Bitcoin, Ether might face less “structural sell pressure.” According to DeFi report analyst Michael Nadeau, Bitcoin miners often need to sell BTC to cover operational costs, while Ethereum validators do not have the same financial burdens, potentially benefiting Ether’s market performance.
Despite the positive outlook, there are concerns regarding Grayscale’s Ethereum Trust (ETHE), managing $11 billion in funds. Similar to the Grayscale Bitcoin Trust (GBTC), which saw significant outflows post-approval, ETHE could influence Ether’s price dynamics if it experiences similar withdrawal patterns.
Currently, Ether is trading at $3,781, marking a 0.82% drop in the last 24 hours and remaining 23% below its all-time high, as reported by CoinMarketCap. This trading activity underscores the volatile yet potentially lucrative nature of the cryptocurrency market amid these significant developments.