Ethereum
Bitcoin, Ethereum Exchange Balances Hit Record Highs as Spot ETFs Drive Withdrawals
Bitcoin And Ethereum supplies on centralized exchanges have reached record levels following the introduction of crypto-linked spot exchange-traded funds (ETFs) in the United States.
According to Glassnode data, Bitcoin balances on exchanges have fallen to 11.6%, the lowest since December 2017. Ethereum balances are even lower at 10.6%, the lowest since October 2015.
Spot ETFs trigger withdrawals
Market experts explained that the drop in exchange balances coincides with the Securities and Exchange Commission (SEC) approval of ETF products for Bitcoin and 19-b filings for Ethereum.
Hi Apollo data reveals that spot Bitcoin ETFs have accumulated 857,700 BTC, valued at $58.5 billion, in just five months. BlackRock IBIT ETF leads this acquisition with approximately $20 billion in assets, followed by Fidelity FBTCwith around $11 billion.
Spot the flow of Bitcoin ETFs. (Source: Farside Investors)
While on site Ethereum ETFs have not yet started trading, investor anticipation led to significant withdrawals. According to CryptoQuant data777,000 ETH, worth approximately $3 billion, have been withdrawn from exchanges since the SEC approval.
In addition, the possibility of betting on ETH influenced the decline in its trade balance. Nansen reports that 32.8 million ETH, or 27% of its total supply, is currently staked to support the network.
Is a supply crisis on the way?
If the downward trend in the foreign exchange balance continues, market experts have predicted that the demand for Bitcoin and Ethereum could lead to a supply crisis.
In a recent social media post, Leon Waidmaan, editor-in-chief of BTC Echo informed Investors should prepare for a “supply squeeze” and the possibility of a “next big move.”
Historically, when digital assets are delisted from exchanges, it suggests that investors are considering holding them rather than selling them, reflecting bullish sentiment and expectations for future growth. A supply tightening could significantly impact prices by limiting available supply, which could lead to substantial price increases if current accumulation trends persist.