$3 Billion Ether Removed from Centralized Crypto Exchanges Since May ETF Approvals

Since the approval of spot Ether exchange-traded funds (ETFs) in the US on May 23, centralized crypto exchanges have experienced massive ETH outflows. Between May 23 and June 2, about 797,000 Ether, worth $3.02 billion, has been moved out of centralized exchanges.

This significant movement, reported by CryptoQuant, suggests a potential supply squeeze as more investors opt for self-custody of their Ether. 

Effects of Ether ETF Approvals

Typically, a decline in the amount of coins held on exchanges means few are available for trading. This trend indicates that investors are transferring their Ether to personal wallets, likely for long-term holding or other uses that do not involve immediate selling. 

They probably believe transferring their holdings will be more profitable than keeping them on exchanges for immediate trading. Such behavior is often seen as a bullish sign, as they indirectly show their confidence in the future value of the token.

Notably, data from Glassnode, analyzed by Leon Waidmann of BTC-ECHO, reveals an interesting fact. It shows that only 10.6% of Ether’s circulating supply is held on exchanges, marking its lowest point in years. This sharp decline highlights a significant shift in how investors manage their ETH assets.

Eric Balchunas, an ETF analyst at Bloomberg, said there’s a strong chance Ether ETFs could launch by late June. Introducing these ETFs is expected to drive up demand for Ether, similar to the surge seen with Bitcoin following the launch of spot Bitcoin ETFs in January.

This increased demand could push Ether prices higher, potentially breaking its all-time high of $4,870 recorded in November 2021.

Meanwhile, Michael Nadeau, a crypto analyst from DeFi Report, noted that Ether might record even greater benefits from demand pressures than Bitcoin. Unlike Bitcoin miners, who often need to sell Bitcoin to cover their mining costs, Ethereum validators do not face the same financial pressures.

Possible Impact of Grayscale’s Ethereum Trust on ETH’s Price

Furthermore, Grayscale’s Ethereum Trust (ETHE), which manages approximately $11 billion in funds, might soon significantly affect Ether’s price. This concern arises from the historical impact of Grayscale’s Bitcoin Trust (GBTC).

After the GBTC was approved, it recorded massive outflows of $6.5 billion within the first month. Considering this occurrence, ETHE could record significant market fluctuations and price changes if the same fate meets with it.

In the meantime, the potential impact of Grayscale’s Ethereum Trust on Ether’s price remains a critical point of concern for investors. The uncertainty of whether ETHE will follow GBTC calls for more cautiousness and vigilance from them.

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