Ethereum ETF approval triggers $3B ETH outflow from crypto exchanges
Ethereum ETF approval triggers $3B ETH outflow from crypto exchanges
Following the approval of ETH ETFs on May 23rd, billions of dollars of Ethereum have been withdrawn from CEXs. This dramatic shift indicates a potential supply shortage as investors move assets to self-custody.
In a significant move for the cryptocurrency market, the approval of spot Ether exchange-traded funds (ETFs) by US SEC on May 23 has led to a substantial withdrawal of Ethereum from centralized exchanges. Since then, over $3 billion worth of Ethereum, equivalent to approximately 797,000 ETH, has been transferred out of exchanges, reducing the available supply to its lowest level in years, as reported by Cointelegraph.
This withdrawal marks a critical shift in investor behavior as more assets are moved to self-custody, possibly due to the increased confidence in Ether's market potential following the ETF approval. According to data from CryptoQuant, the circulating Ether supply on exchanges has plummeted to 10.6%, signaling a significant reduction in coins available for immediate trading.
The anticipated launch of Ether ETFs by late June is fueling optimism among analysts. Last week, Bloomberg ETF analyst Eric Balchunas said in X post that Ether ETFs have a "legit possibility" of launching by the end of June. Other experts suggest that Ether will surpass its previous all-time high of $4,870 in November 2021, driven by increased demand pressure.
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"Ether may face even greater demand pressure than Bitcoin due to the lack of structural sell pressure," noted https://thedefireport.io/research/the-turning-point#a-simple-framework-to-think-about-p DeFi crypto analyst Michael Nadeau. Unlike Bitcoin miners who must sell BTC to cover operational costs, Ethereum validators do not face similar financial constraints, further supporting the potential for a price surge.
However, there are concerns about the potential impact of Grayscale's Ethereum Trust (ETHE), which manages $11 billion in assets. If it follows a disbursement pattern similar to the Grayscale Bitcoin Trust, it could significantly affect Ether's price dynamics.
As the market adjusts to these developments, investors and analysts alike will be watching closely to see how the introduction of Ether ETFs will shape the future of Ethereum and the broader cryptocurrency landscape. The reduction in available supply could create a supply squeeze, potentially driving prices higher as demand increases.
See also: Hong Kong calls for unregistered crypto exchanges to leave the market
