Crypto Exchanges Witness $3B Ethereum Withdrawal Following ETF Approvals

Since the May 23 approval of spot Ether (ETH) exchange-traded funds (ETFs) in the United States, over $3 billion worth of Ether has been withdrawn from centralized crypto exchanges, indicating a potential upcoming supply squeeze.

CryptoQuant data shows that between May 23 and June 2, the amount of Ether on exchanges dropped by approximately 797,000 ETH, equivalent to $3.02 billion.

This reduction in exchange reserves suggests that fewer coins are available for sale as investors move their holdings to self-custody for purposes other than immediate selling.

According to Glassnode data shared by BTC-ECHO analyst Leon Waidmann, the percentage of circulating Ether supply held on exchanges has dropped to its lowest level in years, now at just 10.6%.

You can buy Ethereum (ETH) on Bitrue

Will ETH Reach New ATH?

Source: Leon Waidmann / Glassnode

Last week, Bloomberg ETF analyst Eric Balchunas suggested that Ether ETFs have a “legit possibility” of launching by late June. Some analysts believe that once spot Ether ETFs start trading, the increased demand pressure could push Ether past its November 2021 all-time high of $4,870, similar to the surge Bitcoin experienced after the launch of spot Bitcoin ETFs in January.

According to DeFi report crypto analyst Michael Nadeau, Ether might benefit even more from demand pressures than Bitcoin, as it lacks the same level of “structural sell pressure.” For instance, Bitcoin miners often need to sell BTC to cover mining costs, whereas Ethereum validators do not face the same operating expenses.

However, there are concerns regarding Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in funds. It could impact Ether's price action if it follows the Grayscale Bitcoin Trust (GBTC) pattern, which saw $6.5 billion in outflows in the first month after approval.

According to CoinMarketCap, Ether is trading at $3,781, down 0.82% over the past 24 hours and approximately 23% below its all-time high.