Since the approval of Ethereum exchange-traded funds (ETFs) in the US on May 23, over $3 billion worth of Ethereum has been withdrawn from cryptocurrency exchanges, signaling a potential supply shortage ahead.
Massive withdrawal of Ethereum from exchanges
Between May 23 and June 2, around 797,000 Ethereums were withdrawn from centralized exchanges, equivalent to $3.02 billion according to data from CryptoQuant. This decrease in Ethereum reserves on exchanges implies that there is less cryptocurrency available for sale, as investors move their funds into personal custody for uses other than immediate sale. This trend could also signal an anticipation of higher prices, encouraging investors to hold their assets for the longer term.
Downward trend in Ethereum reserves on exchanges
Glassnode data shared by analyst Leon Waidmann shows that the percentage of outstanding Ethereum supply held on exchanges is also at its lowest level in years, at just 10.6%. This suggests that more and more users prefer to keep their Ethereum assets in private wallets. This trend could indicate growing confidence in Ethereum’s long-term value.
Ethereum ETFs pave the way to new heights
Bloomberg ETF analyst Eric Balchunas suggested that Ethereum ETFs could legitimately be launched by the end of June. Some analysts believe Ethereum could surpass its previous November 2021 high of $4,870 once Ethereum ETFs start trading, due to increased demand pressure, similar to that seen for Bitcoin after the launch of Bitcoin ETFs.
