- Ethereum reserves on centralized exchanges decline post-U.S. SEC approval of spot Ether ETFs.
- Market analyst Ali Martinez notes a withdrawal of approximately 777,000 ETH, worth around $3 billion.
The quantity of Ethereum stored on centralized exchanges is decreasing quickly since the U.S. Securities and Exchange Commission approved spot Ether ETF products.
Ethereum Liquidity Drain
Centralized exchanges serve as the primary access points for most traders to buy and sell cryptocurrencies like Ethereum. Market analyst Ali Martinez has highlighted that the supply of this cryptocurrency on these platforms is starting to decrease.
Martinez recently shared on X that following the U.S. endorsement of spot Ethereum ETF products, about 777,000 ETH, worth roughly $3 billion, has been pulled from crypto exchanges. While these ETH ETF products haven’t started trading officially on exchanges yet, the continuation of this trend could impact Ethereum’s price trajectory over time.
Since the @SECGov approved spot #Ethereum ETFs, approximately 777,000 $ETH — valued at about $3 billion — have been withdrawn from #crypto exchanges! pic.twitter.com/EzQVC0cw27
— Ali (@ali_charts) June 2, 2024
A notable observation from the analyst’s chart is that the present amount of Ethereum held on exchanges is at its minimum since at least December 11, 2023. Given the investment by institutions in Bitcoin through its spot ETFs, Ethereum could potentially encounter a shortage of supply soon.
Should the Ether spot ETF undergo a similar accumulation as Bitcoin, it could quickly elevate the price of Ethereum. This was similarly observed with Bitcoin when corporate capital inflows pushed the coin’s price to a new all-time high of over $73,000 in March.
Other ETH Growth Drivers
Apart from the spot ETF offerings, Ethereum has multiple underlying factors that might influence its long-term pricing. This digital currency exhibits deflationary characteristics, with minor portions of the token being consumed and withdrawn from circulation via transaction fees.
As a blockchain, Ethereum is progressing with various upgrades and innovations to optimize its Layer-2 protocols. When these factors come together, it is likely that Ethereum’s price will break away from its current stagnant trend and experience a significant rally in the future.
