ETF Approvals Lead to $3 Billion Ethereum Withdrawal from Crypto Platforms
Crypto News- 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spot Ether exchange-traded funds (ETFs) in the United States on May 23, over $3 billion worth of Ether (ETH) has been withdrawn from centralized crypto exchanges.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 outflow hints at a potential supply squeeze in the near future.
According to CryptoQuant data, the amount of Ether on exchanges dropped by approximately 797,000 ETH between May 23 and June 2, translating to about $3.02 billion. When investors move their coins to self-custody, it typically means fewer coins are available for immediate sale, leading to lower exchange reserves. Supporting this, Glassnode data shared by BTC-ECHO analyst Leon Waidmann reveals that the percentage of circulating Ether held on exchanges has hit its lowest level in years, now standing at just 10.6%.
Ethereum ETFs Poised for Potential Market Surge
Ethereum ETFs might be paving the way to new all-time highs. Bloomberg ETF analyst Eric Balchunas suggested last week that there’s a “legit possibility” of Ether ETFs launching by late June.
Some analysts believe that if spot Ether ETFs start trading, it could push Ether to break its November 2021 all-time high of $4,870, driven by increased demand pressure. This situation mirrors what happened with Bitcoin (BTC) after spot Bitcoin ETFs began trading in January. According to DeFi report crypto analyst Michael Nadeau, Ether might benefit more from demand pressures than Bitcoin because it lacks the same “structural sell pressure.” Unlike Bitcoin miners, who sometimes need to sell BTC to cover mining costs, Ethereum validators do not face similar operational expenses.
However, there are concerns regarding Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in funds. If ETHE follows the pattern of the Grayscale Bitcoin Trust (GBTC) — which experienced $6.5 billion in outflows in the first month after its approval — it could impact Ether’s price action significantly.
Currently, Ether is trading at $3,781, down 0.82% over the past 24 hours and about 23% below its all-time high, according to CoinMarketCap.
FAQ on Ethereum ETF Approvals and Market Impact
What is the significance of the approval of spot Ether ETFs in the United States?
The approval of spot Ether ETFs in the United States is significant because it provides investors with a new way to gain exposure to Ethereum through a regulated financial product. This can lead to increased investment in Ether, potentially driving up demand and price. Since the approval on May 23, there has been a substantial withdrawal of Ether from centralized exchanges, indicating that investors might be moving their holdings to self-custody in anticipation of higher prices.
How much Ether has been withdrawn from centralized exchanges since the ETF approval?
Over $3 billion worth of Ether, approximately 797,000 ETH, has been withdrawn from centralized crypto exchanges between May 23 and June 2. This significant outflow suggests that fewer coins are available for immediate sale, which could lead to a supply squeeze.
What does the reduction in Ether held on exchanges imply?
The reduction in Ether held on exchanges, now at its lowest level in years at just 10.6% of the circulating supply, implies that fewer coins are available for sale. This often signals that investors are moving their Ether to self-custody, which can reduce selling pressure and potentially drive up prices due to lower supply on the market.
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