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spot Ether exchange-traded funds (ETFs) in the United States on May 23, over $3 billion worth of Ether (ETH) has been withdrawn from centralized crypto exchanges.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 decrease in Ether on exchanges, totaling around 797,000 ETH or $3.02 billion, indicates a potential upcoming supply shortage. As investors move their coins to self-custody for various purposes, the reduced exchange reserves imply that there are fewer coins available for sale.
Data from Glassnode, shared by BTC-ECHO analyst Leon Waidmann, reveals that the percentage of circulating Ether supply held on exchanges is currently at its lowest level in years, sitting at just 10.6%. This further emphasizes the decreasing availability of Ether for trading on exchanges.
Analysts are optimistic about the launch of Ether ETFs, with Bloomberg ETF analyst Eric Balchunas suggesting a strong possibility of their launch by late June. Similar to the impact of spot Bitcoin ETFs on Bitcoin’s price, some believe that the introduction of Ether ETFs could drive up demand and potentially push Ether to break its previous all-time high of $4,870, reached in November 2021.
Ether may experience even greater demand pressure compared to Bitcoin due to its lack of “structural sell pressure,” as highlighted by crypto analyst Michael Nadeau. Unlike Bitcoin miners who occasionally sell BTC to cover mining costs, Ethereum validators do not face the same expenses. This distinction could contribute to Ether’s price appreciation.
However, there are concerns regarding Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in funds. If ETHE follows the pattern of Grayscale Bitcoin Trust (GBTC), which saw significant outflows after approval, it could potentially influence Ether’s price action.
Currently, Ether is trading at $3,781, experiencing a slight decrease of 0.82% over the past 24 hours and a decline of approximately 23% from its all-time high, according to CoinMarketCap.