According to “Cointelegraph”, more than $3 billion worth of ether (ETH) has been transferred from the centralized cryptocurrency since the U.S. Securities and Exchange Commission (SEC) approved key regulatory documents related to the Ethereum spot ETF on May 23. Exchange outflows signal a possible impending supply squeeze.
According to blockchain data analytics firm CryptoQuant, the number of ether coins on exchanges fell by approximately 797,000 between May 23 and June 2, equivalent to $3.02 billion. Lower exchange reserves mean fewer coins are available for sale, as investors move their coins into self-custodial wallets rather than holding them for sale on exchanges.
Glassnode data shared by BTC-ECHO analyst Leon Waidmann shows that the proportion of ether’s circulating supply held by exchanges has also reached its lowest level in years, at just 10.6%.
Source: Leon Waidmann
Investors must still wait for SEC approval of the S-1 registration statement filed by the fund’s issuer before they can begin trading the Ethereum spot ETF. Some analysts believe that once such ETFs begin trading, ether prices could rise above the all-time high of $4,870 set in November 2021 due to increased demand pressure, similar to what happened with Bitcoin after spot ETFs began trading.
However, some people are worried that the Grayscale Ethereum Trust Fund (ETHE) will put downward pressure on the price of Ethereum after converting to an ETF. According to previous reports by Zombit, the research team of cryptocurrency data provider Kaiko believes that if ETHE follows a similar pattern to the Grayscale Bitcoin Trust (GBTC) in the first month after the conversion, it may experience an average daily outflow of US$110 million. .
Analysts at JPMorgan stated in a report released last week that demand for Ethereum spot ETFs will be much lower than similar Bitcoin fund products for a variety of reasons, and believed that ETHE may have $1 billion in funds. outflow.
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