Ethereum Withdrawals Hit $3B from Crypto Exchanges Following Spot Ether ETF Approvals

Jimmy Aki
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A June 2 report revealed that over $3 billion worth of Ether was withdrawn from centralized crypto exchanges since the approval of spot Ether exchange-traded funds (ETFs) in the United States.

Investors Move Coins to Self-Custody Amid Upcoming Spot Ether ETF Trade

On May 23, the United States Securities and Exchange Commission (SEC) approved spot Ether ETFs for the first time. Within a week, approximately 797,000 Ether, equivalent to $3.02 billion, was withdrawn from centralized crypto exchanges, according to CryptoQuant.

This significant outflow has reduced the available supply of Ether on exchanges to its lowest level in years, indicating that investors are moving their assets to self-custody, likely for long-term holding rather than immediate sale.

Spot Ether ETF
$3B worth of Ether was withdrawn from centralized crypto exchanges

Glassnode’s data, shared by BTC-ECHO analyst Leon Waidmann, further revealed that only 10.6% of the circulating Ether supply remains on exchanges. This is the lowest level in years and suggests a strong shift in investor behavior.

The approval of Ether ETFs has fueled speculation about Ether reaching new all-time highs. This is as Bloomberg ETF analyst Eric Balchunas predicts that Ether ETFs could launch by late June, potentially increasing demand and driving prices higher.

Crypto enthusiasts anticipate that Ether could surpass its all-time high of $4,891, similar to Bitcoin’s surge following spot ETF approval. Ether’s potential price advantage is attributed to lower structural sell pressure than Bitcoin due to Ethereum validators having lower operational costs.

Spot Ether ETF
ETH price has increased due to the approval of Spot Ether ETF

At press time, Ether is trading at $3,822, reflecting a slight 0.38% increase in the past 24 hours and a 23% drop from its all-time high, according to CoinMarketCap.

Market sentiments are influenced by the reduced Ether reserves on exchanges and the anticipated launch of Ether ETFs, signaling a potential bullish trend ahead.

Grayscale’s Spot Ether ETF Could Affect Ether Moonshot

There are growing concerns about the impact of Grayscale’s Ethereum Trust (ETHE), which currently has assets under management (AUM) of $11 billion.

According to a report by analysis firm Kaiko on May 27, 2024, ETHE could face substantial outflows, potentially averaging around $110 million per day. This projection is based on the pattern observed with Grayscale’s Bitcoin Trust (GBTC) when it converted from a closed-end fund to a spot Bitcoin ETF on January 11.

Following GBTC’s conversion, it experienced major outflows, with 23% of its AUM flowing out in the first month, totaling $6.5 billion. If ETHE encounters similar outflows, it could result in average daily outflows of $110 million, representing about 30% of Ether’s average daily trading volume on Coinbase, as noted by Kaiko.

With ETHE’s current AUM at $11 billion, this potential outflow could impact Ether’s market dynamics and liquidity, echoing the effects seen in the GBTC scenario. Recall that GBTC recorded a 72-day outward streak on April 25, exceeding all ETFs in history.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.