The Impact of Ethereum ETF Approval on Crypto Exchanges
Following the recent approval of spot exchange-traded funds (ETF) on Ether in the United States, an exodus of over $3 billion worth of Ethereum has been witnessed, with investors withdrawing their holdings from centralized crypto exchanges (CEX). This significant withdrawal might indicate an impending contraction of the supply, affecting the availability of coins for immediate sale. Data from CryptoQuant reveals that between May 23 and June 2, around 797,000 ETH, equivalent to $3.02 billion, were moved out of exchanges, suggesting a shift towards self-custody by investors for various purposes other than immediate selling.
The Decrease in Ether Supply Held on Exchanges
- Between May 23 and June 2, around 797,000 ETH worth $3.02 billion were withdrawn from centralized exchanges following the approval of Ethereum ETFs in the USA.
- This decline in reserves indicates a reduction in available coins for immediate sale, as investors opt for self-custody.
- Percentage of circulating Ether supply held on exchanges is currently at a low level of 10.6%, according to data from Glassnode.
Increasing Demand Pressure on Ethereum
- Analysts anticipate an uptick in demand for Ethereum with the likely introduction of Ether ETFs by the end of June.
- The trading of spot ETFs on ETH could drive the price above the previous all-time high of $4,870, similar to Bitcoin’s price surge post ETF introduction.
- Market experts speculate that decreased supply on exchanges might enhance the demand for Ethereum, putting upward pressure on its price.
The Political Landscape and Ethereum’s ETF Approval
- Compared to Bitcoin, Ether might experience stronger demand pressures due to lower structural selling pressure associated with Ethereum validators.
- Concerns exist regarding the influence of Grayscale’s Ethereum Trust (ETHE) and its potential impact on Ether’s price.
- The approval of spot ETFs on Ethereum is believed to be influenced by political factors rather than purely financial considerations, as per analysts.
Potentially Influencing Factors on Ethereum’s ETF Approval
- Political decisions involving the Biden administration and community responses are believed to have played key roles in the approval process.
- Regulatory changes might be necessary for the approval of ETFs on other cryptocurrencies like Solana, as emphasized by experts.
- Crypto trader Brian Kelly suggests Solana could be the next cryptocurrency to have a spot ETF in the US, following Bitcoin and Ethereum.
Hot Take: Implications of Ethereum ETF Approval on US Market
With the recent surge in Ethereum withdrawals from centralized exchanges post ETF approval in the USA, there is a growing anticipation of increased demand pressure on Ether. The decreasing supply on exchanges, coupled with expectations of Ether ETF launches by the end of June, could potentially lead to a significant price surge beyond the previous all-time high. Moreover, political influences on ETF approvals and regulatory changes may shape the future landscape of cryptocurrency trading in the US, impacting not just Ethereum but potentially other digital assets like Solana as well.
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