According to the latest news, recently over 3 billion dollars of ETH have been withdrawn from centralized exchanges (CEX) after the approval of Ethereum ETFs in the United States. What does this mean? Let’s see all the details below.
Summary
Latest news: The approval of Ethereum ETFs in the USA triggers the withdrawal of ETH from centralized exchanges
As anticipated, since the approval of spot exchange-traded funds (ETF) on Ether in the United States on May 23, over 3 billion dollars of Ethereum have been withdrawn from centralized crypto exchanges (CEX).
Indicating a possible imminent contraction of the supply. The data from CryptoQuant show that between May 23 and June 2 the amount of Ether held on exchanges decreased by approximately 797,000 ETH, equivalent to 3.02 billion dollars.
This decline in reserves indicates that fewer coins are available for immediate sale, as investors transfer their holdings to self-custody for various purposes other than immediate sale.
According to the data shared by the BTC-ECHO analyst Leon Waidmann, coming from Glassnode, the percentage of circulating Ether supply held on exchanges is currently at the lowest level in recent years, standing at just 10.6%.
The decrease in the available supply on exchanges could contribute to increasing the demand pressure on Ether. Bloomberg ETF analyst Eric Balchunas suggests a “legitimate possibility” of the launch of Ether ETFs by the end of June.
Some analysts hypothesize that the trading of spot ETFs on ETH could increase the demand for Ethereum.
Pushing the price beyond the all-time high of $4,870 reached in November 2021, similar to the effect observed with Bitcoin after the introduction of spot ETFs on Bitcoin in January.
The political influence on the approval of spot ETFs on Ethereum
Compared to Bitcoin, Ether could benefit even more from demand pressures due to its lower “structural selling pressure,” as indicated in a report by DeFi analyst Michael Nadeau.
While Bitcoin miners occasionally sell BTC to cover mining expenses, Ethereum validators do not face the same operational costs. Potentially contributing to a stronger price performance for Ether.
However, there are concerns regarding the influence of the Ethereum Trust (ETHE) by Grayscale, which manages 11 billion dollars of funds, on the price action of Ether.
If it follows the model of the Grayscale Bitcoin Trust (GBTC), significant outflows from ETHE could occur, influencing the price of Ether.
The Bloomberg ETF analyst James Seyffart believes that the approval of spot ETFs on Ethereum was likely influenced by political decisions rather than purely financial considerations.
In a recent interview, Seyffart suggested that the political climate, including the actions of the Biden administration and the responses of the crypto community, played a significant role in the approval.
Seyffart also noted that, in addition to Bitcoin and Ethereum, the approval of other ETFs on criptovalute, including Solana, is unlikely without significant regulatory changes.
He indeed emphasized the need for a regulated market to monitor these assets in search of fraud and manipulations.
On the other hand, the investor and cryptocurrency trader Brian Kelly has suggested that Solana could potentially become the next cryptocurrency to have a spot ETF in the United States.
In a recent episode of “Fast Money” on CNBC, Kelly, founder and CEO of the BKCM Digital Asset Fund, raised the question:
“The trade now is, who is next? You have to think of Solana as probably the next. Bitcoin, Ethereum, and Solana are probably the big three of this cycle.”
