Investors are increasingly choosing self-custody over centralized exchanges, resulting in a significant decrease in the amount of Ether (ETH) held on these platforms. Recent reports indicate that the supply of Ether on exchanges has reached its lowest level in years, dropping to 10.6%. This decline can be attributed to the approval of the first-ever Ether ETF by the US Securities and Exchange Commission, which has prompted investors to withdraw over $3 billion worth of Ether from centralized exchanges since May 23.
Data from CryptoQuant shows that the amount of Ether on exchanges has plummeted by 797,000, indicating a reduction in available tokens for sale as investors move towards self-custody. Glassnode data shared by BTC-ECHO analyst Leon Waidmann confirms this trend, revealing that the circulating Ether supply held by exchanges is at its lowest level in years, standing at 10.6%.
This shift towards self-custody may benefit Ether more than Bitcoin, according to crypto analyst Michael Nadeau. Unlike Bitcoin miners who occasionally sell BTC to cover mining costs, Ethereum validators do not face the same operating expenses. Additionally, Bloomberg analyst James Seyffart suggests that the spot Ether ETF has a high chance of launching in June, further fueling demand for Ether.
Key indicators point to June as the potential launching date for the Ether ETF. BlackRock, Franklin Templeton, VanEck, and Invesco Galaxy have all updated their S-1 forms with the SEC, indicating progress towards the launch. Bloomberg ETF analyst James Seyffart believes that BlackRock’s updated S-1 form is a sign of collaboration between the issuer and the regulator to facilitate the launch. The updated filing also reveals information about the ETF’s seed capital investor, who purchased $10,000,000 in Shares on May 21, 2024.
Crypto analyst Michaël van de Poppe predicts that the launch of the Ether ETF could propel ETH to surpass its all-time high price and reach the $5000 zone. This, in turn, could reduce Bitcoin’s dominance in the overall market cap and allow altcoins to thrive.
However, there are concerns that the Grayscale Ethereum Trust (ETHE), which manages $11 billion in funds, could influence the price of Ether similarly to the Grayscale Bitcoin Trust (GBTC). The GBTC experienced an outflow of $6.5 billion in the first month of approval.
At the time of writing, ETH is trading at $3,815, having increased by 1% in the last 24 hours and 23% in the last 30 days.