Ethereum
$3B ETH Withdrawals from Exchanges Signal Potential Supply Squeeze for Ethereum
$3B ETH Withdrawals from Exchanges Signal Potential Supply Squeeze for Ethereum
Following the American approval of the spot Ethereum (ETH) Exchange-traded funds (ETFs) on May 23 saw over $3 billion worth of Ether withdrawn from centralized crypto exchanges, hinting at a possible future supply squeeze. CryptoQuant Data revealed that between May 23 and June 2, approximately 797,000 Ether, valued at $3.02 billion, was withdrawn from exchanges.
This significant reduction in foreign exchange reserves suggests that investors are moving their Ether into self-custody solutions, indicating a preference for holding rather than immediately selling. Fewer coins on exchanges generally mean reduced availability for sale, which can lead to tighter supply conditions. Supporting this trend is data from Glassnode, watch that the percentage of circulating Ether held on exchanges has fallen to its lowest level in years, now standing at just 10.6%.
The approval of Ether ETFs has generated considerable interest, with Bloomberg ETF analyst Eric Balchunas suggesting that these ETFs could realistically launch by the end of June. Some market analysts predict that the introduction of Ethereum spot ETFs could propel Ether to surpass its all-time high of $4,870, set in November 2021.
However, concerns remain about the potential impact of Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in assets. If it follows the pattern of the Grayscale Bitcoin Trust (GBTC), which saw outflows of $6.5 billion shortly after its approval, it could significantly influence ETH’s price dynamics.