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spot Ether exchange-traded funds (ETFs) in the United States on May 23, over $3 billion worth of Ether (ETH) has been withdrawn from centralized crypto exchanges, indicating a potential upcoming supply shortage.
According to CryptoQuant data, the amount of Ether held on exchanges decreased by approximately 797,000 between May 23 and June 2, equivalent to $3.02 billion.
This decline in exchange reserves suggests that there are fewer coins available for sale, as investors are moving their coins to self-custody for various purposes other than immediate selling. Glassnode data shared by BTC-ECHO analyst Leon Waidmann also reveals that the percentage of circulating Ether supply held on exchanges is currently at its lowest level in years, standing at just 10.6%.
Last week, Bloomberg ETF analyst Eric Balchunas expressed that Ether ETFs have a “legit possibility” of launching by late June. Some analysts believe that once spot Ether ETFs start trading, Ether could surpass its all-time high of $4,870, which was reached in November 2021, due to increased demand pressure, similar to what happened with Bitcoin after the trading launch of spot Bitcoin ETFs in January.
In fact, Ether could benefit even more from demand pressures compared to Bitcoin. According to DeFi report crypto analyst Michael Nadeau, Ether does not face the same level of “structural sell pressure” as Bitcoin does. For instance, Bitcoin miners are sometimes compelled to sell BTC to cover mining costs, whereas Ethereum validators do not have the same operating expenses.
However, there are concerns that Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in funds, could influence Ether’s price action if it follows the pattern of the Grayscale Bitcoin Trust (GBTC). The GBTC saw $6.5 billion in outflows in just the first month after approval.
Currently, Ether is trading at $3,781, experiencing a 0.82% decrease over the past 24 hours and a decline of approximately 23% from its all-time high, according to CoinMarketCap.