Ether is on the move! The amount of Ether held on crypto exchanges has hit a multi-year low, with over $3 billion withdrawn since the green light for spot Ether ETFs in the US on May 23rd. This suggests a potential supply squeeze, as investors are increasingly opting to hold their Ether in self-custody wallets, potentially driving ETH price up.
Data from CryptoQuant reveals a decrease of roughly 797,000 ETH (worth $3.02 billion) on exchanges between May 23rd and June 2nd. This drop signifies that fewer coins are readily available for sale, potentially driving prices up. Glassnode data, analyzed by Leon Waidmann of BTC-ECHO, confirms that only 10.6% of circulating Ether currently resides on exchanges—the lowest level in years.
Analysts like Bloomberg's Eric Balchunas predict a surge in Ether demand with the potential launch of Ether ETFs by late June. This could propel prices past the November 2021 peak of $4,870, mirroring the rise witnessed with Bitcoin ETFs. Additionally, some analysts argue that Ether might experience even stronger demand compared to Bitcoin due to lower "structural sell pressure." Unlike Bitcoin miners, who must sell coins to cover costs, Ethereum validators have fewer expenses, according to DeFi report analyst Michael Nadeau in a May 28th report.
However, a potential cloud hangs over this optimistic outlook: Grayscale's Ethereum Trust (ETHE), currently managing $11 billion, could dampen the price rally. If it follows the pattern of Grayscale Bitcoin Trust (GBTC), which saw significant outflows after its approval, ETHE might experience similar selling pressure.
As of now, Ether trades at $3,781, down slightly over the past day and roughly 23% shy of its all-time high.
