Monday Newsletter

Explore the latest trends, gain valuable insights, and stay informed in the dynamic cryptocurrency ecosystem.

03 June 2024

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spot Ether exchange-traded funds (ETFs) in the United States on May 23, over $3 billion worth of Ether (ETH) has been withdrawn from centralized crypto exchanges.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 signals a potential supply squeeze, with only 10.6% of the total Ether supply now held on these platforms, marking its lowest level in years.

According to data from CryptoQuant, the amount of Ether on exchanges decreased by approximately 797,000 ETH between May 23 and June 2, equivalent to $3.02 billion. This reduction suggests fewer coins are available for immediate sale as investors transfer their holdings to self-custody.

Implications of Decreased Ether Exchange Reserves

The dwindling Ether reserves on exchanges indicate that investors might be preparing for purposes other than immediate selling, potentially leading to increased demand pressure. Glassnode data, shared by BTC-ECHO analyst Leon Waidmann, confirms that the circulating Ether supply held on exchanges has plummeted to just 10.6%, the lowest in years.

Prospects of Ethereum ETFs and Potential ATH

Bloomberg ETF analyst Eric Balchunas recently suggested that Ether ETFs have a “legit possibility” of launching by late June. Analysts predict that once spot Ether ETFs begin trading, Ether could break its November 2021 all-time high (ATH) of $4,870, driven by increased demand pressure similar to Bitcoin’s surge following the launch of spot Bitcoin ETFs in January.

Comparative Analysis: Ethereum vs. Bitcoin

Ether may experience greater benefits from demand pressures compared to Bitcoin. According to DeFi report crypto analyst Michael Nadeau, Ethereum does not face the same “structural sell pressure” as Bitcoin. Bitcoin miners often need to sell BTC to cover mining costs, whereas Ethereum validators do not incur comparable operating expenses.

Potential Influence of Grayscale’s Ethereum Trust

There are concerns about Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in funds. If it mirrors the Grayscale Bitcoin Trust (GBTC) — which saw $6.5 billion in outflows in the first month post-approval — it could significantly influence Ether’s price action.

Current Ether Price and Market Performance

As of now, Ether is trading at $3,781, down 0.82% in the past 24 hours and approximately 23% below its all-time high, according to CoinMarketCap.