Bittime - Following the approval of Ethereum Exchange-Traded Fund (ETF) in the United States on May 23, data from Cointelegraph and CryptoQuant shows that more than $3 billion of ETH has been transferred out of centralized crypto exchanges.
ETH Outflow from Exchanges Hits $3 Billion
According to CryptoQuant, the amount of ETH changing hands out of centralized exchanges reached around 797,000 ETH, equivalent to $3.02 billion. This movement indicates crypto investors are moving their ETH holdings to private (self-custody) wallets.
The decrease in ETH reserves on these exchanges has an important impact. With the amount of ETH available to trade on exchanges decreasing, a potential shortage (supply squeeze) could occur. This scarcity could ultimately drive the price of ETH higher.
Glassnode data further strengthens the signal of ETH's potential scarcity. This data shows that the percentage of ETH in circulation currently on centralized exchanges is at its lowest level in recent years, namely only 10.6%. This figure shows the trend of investors to secure their ETH holdings outside of exchanges.
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Ethereum ETFs and the Potential of a New All-Time High
The approval of an ETH-based ETF in the United States was welcomed by crypto market players. Bloomberg ETF analyst Eric Balchunas estimates an ETH ETF could potentially launch by the end of June 2024.
It is believed that the launch of the ETH ETF could encourage increased demand for ETH, similar to what happened to Bitcoin (BTC) after the Bitcoin ETF began trading in January.
This increase in demand could ultimately bring the price of ETH back to its All-Time High record, $4,870, which was reached in November 2021.
ETH More Profitable Than BTC?
Crypto analyst Michael Nadeau of DeFi report believes that ETH has greater price upside potential than BTC post-ETF launch. This is due to fundamental differences between the consensus mechanisms of the two blockchains.
Bitcoin miners (miners) periodically have to sell BTC to cover mining costs. This creates structural selling pressure on the price of Bitcoin.
In contrast, Ethereum validators did not face similar selling pressure. They do not need to incur large operational costs like Bitcoin miners. Thus, validators are less likely to need to sell their ETH holdings to cover operational costs.
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Grayscale Ethereum Trust
Although the prospects for ETH ETFs are bright, there are concerns regarding the potential influence of the Grayscale Ethereum Trust (ETHE) on ETH prices. ETHE is an investment product from Grayscale which currently manages funds amounting to $11 billion in ETH.
If ETHE follows in the footsteps of its sibling, the Grayscale Bitcoin Trust (GBTC), these concerns become reasonable. After the approval of the Bitcoin ETF last January, GBTC actually experienced an outflow (withdrawal of funds) of $6.5 billion in just the first month.
Massive outflows from ETHE can certainly have a negative impact on the price of ETH. Therefore, ETHE is one of the things that must be paid attention to when the spot Ethereum ETF is released.
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How to Buy Crypto with Bittime
You can buy and sell crypto assets in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also Read:
Regulatory Overview of Ethereum ETF Proposals
ETH Spot ETF Approved by SEC, but the Process Isn't Complete Yet!
SEC Begins Discussions with ETH ETF Issuer on Form S-1
DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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