03 Jun

Since the recent approval of spot Ether exchange-traded funds (ETFs) in the United States, there has been a significant withdrawal of Ether from centralized crypto exchanges (CEXes), totaling over $3 billion worth. According to data from CryptoQuant, between May 23 and June 2, around 797,000 ETH, equivalent to $3.02 billion, has been moved off exchanges. This decrease in exchange reserves indicates that fewer Ether coins are readily available for sale, as investors opt to transfer their holdings to self-custody for various purposes, not just immediate selling.

The Lowest Ether Supply in Years on Exchanges

Additional data from Glassnode, provided by BTC-ECHO expert Leon Waidmann, shows that the proportion of circulating Ether supply held on exchanges is at 10.6%, the lowest level in years.

There can be more demand pressure on Ether as a result of the decline in supply on exchanges.

The possibility of Ether ETFs launching has attracted attention, with Bloomberg ETF analyst Eric Balchunas suggesting a likelihood of their introduction by late June.

Some experts speculate that the trading debut of spot Ether ETFs might lead to increased demand for Ether, potentially driving its price beyond its previous peak of $4,870 reached in November 2021, akin to the impact seen with Bitcoin after spot Bitcoin ETFs were introduced in January.

Compared to Bitcoin, Ether could experience even greater demand-driven benefits due to its lower "structural sell pressure," as noted in a report by DeFi analyst Michael Nadeau.

While Bitcoin miners sometimes sell BTC to cover mining costs, Ethereum validators don't face similar expenses, potentially contributing to stronger price performance for Ether.

However, concerns have arisen regarding the influence of Grayscale's Ethereum Trust (ETHE), which manages $11 billion in assets, on Ether's price dynamics.

If it follows the trend of the Grayscale Bitcoin Trust (GBTC), significant outflows from ETHE could impact Ether's price.

Currently, Ether is trading at $3,781, reflecting a 0.82% decline in the last 24 hours and a 23% drop from its all-time high, as per CoinMarketCap.

The Approval of Ethereum ETF Was Political

James Seyffart, an ETF analyst at Bloomberg, thinks that political choices more than just money had a role in the acceptance of spot Ethereum ETFs.

In a recent interview, Seyffart made the argument that the political environment—which included the Biden administration's actions and the reactions of the cryptocurrency community—was crucial to the approval's success.

According to Seyffart, the establishment of additional cryptocurrency ETFs, such as Solana, outside of Bitcoin and Ethereum, is unlikely to occur without considerable regulatory reforms.

He pointed out that these assets need to be watched for fraud and manipulation, which calls for a controlled market.

On the other hand, Solana might be the next cryptocurrency to have a spot ETF in the US, according to cryptocurrency trader and investor Brian Kelly.

In a recent segment of CNBC's 'Fast Money', Kelly, also the founder and CEO of the BKCM Digital Asset Fund, raised the question, "The trade now is, who's next?"

He then indicated, "You've got to think about Solana as probably the next one. Bitcoin, Ethereum, and Solana are likely the major three for this cycle."

June 2024, Cryptoniteuae

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