Key Takeaways:
The supply of Ether (ETH) on crypto exchanges has hit an all-time low after over $3 billion worth of the cryptocurrency was removed from trading platforms since the approval of spot Ethereum exchange-traded funds (ETFs) in the US.
Supply of Ethereum on Crypto Exchanges at All-Time Low After Spot ETH ETF Approval
According to data from CryptoQuant, between May 23rd and June 2nd, Ethereum traded on centralized exchanges dropped by around 797,000 ETH, equivalent to $3.02 billion at current rates.
A reduction in exchange reserves signifies that fewer tokens are available for sale as investors move their own holdings to self-custody wallets for purposes other than an immediate sale.
On-chain analyst Leon Waidmann wrote in an X post that exchange balances for both Bitcoin and Ethereum are at their “lowest levels in years”, with BTC down to 11.6% and ETH at 10.6%. He warned that a “supply squeeze” for the cryptocurrencies was coming as whales continue to accumulate.
SEC Approves 7 Spot Ether ETFs, Funds Could Begin Trading by the End of the Month
Bloomberg ETF analyst Eric Balchunas predicts spot Ether ETFs have a “legit possibility” of launching by late June or early July.
Last week, the Securities and Exchange Commission (SEC) asked the Nasdaq, NYSE, and CBOE exchanges to submit 19b-4 forms by seven spot Ether ETF issuers, including Wall Street heavyweights BlackRock, Fidelity, and Van Eck, and digital asset managers Grayscale and ARK Invest.
The securities watchdog has approved applications to list BlackRock’s iShares Ethereum Trust, Grayscale Ethereum Trust, VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, and Fidelity Ethereum ETF.
ETF analyst Eric Seyffart noted that the approval process usually takes up to five months to be completed. However, due to the massive popularity of crypto-backed securities, the SEC could accelerate the procedure. He referred to the case of spot Bitcoin ETFs that began trading in January, where the funds were fully approved and listed on exchanges only 90 days after the 19b-4 filing.
BlackRock has already submitted Form S-1 to the SEC indicating that they intend to list shares of their upcoming iShares Ethereum Trust ETF on a public US stock exchange. In its amended form, the investment behemoth disclosed the sale of shares in the ETF valued at $10 million to a seed capital investor that allocated money for the fund. The BlackRock-affiliated firm purchased the shares at $25.00 each and has taken delivery of 400,000 stocks. The iShares Ethereum Trust would trade under the ticker symbol “ETHA”.
The asset manager also issues the iShares Bitcoin Trust (IBIT), which recently dethroned Grayscale Bitcoin Trust (GBTC) to become the largest Bitcoin-backed investment fund in the world. As of May 28th, IBIT holds 288,670 BTC valued at over $20 billion, while GBTC has accumulated 287,450 BTC worth $19.7 billion since both ETFs began trading this year.
Will Ethereum Make or Break Following ETF Launch?
Some experts say the launch of the spot Ether ETFs could create a demand pressure that would result in Ether breaking its all-time high price of $4,870, set in November 2021. Bitcoin experienced an upward rise in value following the trading launch of the spot Bitcoin ETFs, which culminated in the apex cryptocurrency setting a new ATH of nearly $74,000 per token in mid-March.
In a report last week, crypto analyst Michael Nadeau said Ether could benefit much further from demand pressure than Bitcoin due to it not having the same level of “structural sell pressure”. He referred to Bitcoin miners occasionally being forced to sell BTC to cover the increased cost of mining, while Ethereum validators don’t have to incur the same operating expenses.
Meanwhile, others are concerned that Ether could face increased price pressure following the conversion of Grayscale Ethereum Trust (ETHE) into an exchange-traded fund. The fund, which manages $11 billion in ETH, could influence the cryptocurrency’s price action if investors decide to sell their shares and move to more attractive offerings from other companies.
In its first trading month, Grayscale suffered a $6.5 billion outflow from the Grayscale Bitcoin Trust (GBTC) ETF, which saw investors exit their positions and buy shares in BlackRock or Fidelity’s spot Bitcoin ETFs that charged a lower commission fee. It is estimated that Grayscale’s ETHE could witness an average daily outflow of $110 million for several weeks following its successful ETF conversion.
At the time of writing, Ether (ETH) is trading at $3,811 – up 0.2% in the last 24 hours.
More News: BlackRock’s IBIT Becomes The World’s Largest Bitcoin ETF With $20 Billion In AUM
