Crypto Exchanges Experience $3B Ethereum Outflow Following ETF Approvals

Crypto exchanges have seen a significant outflow of Ethereum (ETH) since the approval of spot Ether exchange-traded funds (ETFs) in May 2024. According to recent reports, over $3 billion worth of Ether has been removed from centralized crypto exchanges since the ETF approvals, signaling a potential upcoming supply squeeze. The amount of Ether on exchanges fell by around 797,000 between May 23 and June 2, equivalent to $3.02 billion.

 

A crowd of people exiting a large building labeled "Crypto Exchanges" while carrying bags of Ethereum worth $3B

 

The approval of Ether ETFs in the United States has been considered a significant milestone for the crypto industry. However, it has also led to a considerable reduction in the available supply of Ether on centralized cryptocurrency exchanges. The outflow of Ether from exchanges is an important indicator of investor sentiment and could have significant implications for the overall market.

The impact of ETF approvals on Ethereum exchanges is a topic of great interest to investors and market analysts alike. The outflow of Ether from exchanges has raised concerns about a potential supply squeeze, as demand for the cryptocurrency continues to grow. Market reactions to these developments have been mixed, with some analysts predicting a bullish outlook for Ethereum, while others remain cautious.

 

Impact of ETF Approvals on Ethereum Exchanges

 

Crypto exchanges lose $3B Ethereum after ETF approvals. Ethereum symbol exits exchanges

Ethereum Outflows and Exchange Reserves

 

The approval of spot Ether exchange-traded funds (ETFs) in the United States on May 23, 2024, has led to a significant shift in investor behavior. According to Cryptoquant data, over $3 billion worth of Ether has been removed from centralized crypto exchanges since the approval of ETFs. Glassnode data shows that the amount of Ether on exchanges fell by around 797,000 between May 23 and June 2, equivalent to $3.02 billion.

This massive outflow of Ether from exchanges has resulted in a decline in exchange reserves, which could potentially lead to a supply squeeze. As a result, the price of Ether may increase due to the reduced availability of the cryptocurrency on exchanges.

Influence on Ethereum’s Price

 

The approval of Ether ETFs has had a significant impact on Ethereum’s price. The price of Ether surged by over 10% following the announcement of ETF approvals, reaching a high of $3,500. However, the price has since stabilized, and at the time of writing, it is trading at around $3,200.

The Ethereum Trust (ETHE), which provides investors with exposure to Ethereum, has also seen a decline in its premium since the approval of ETFs. The premium of ETHE has fallen from over 50% to around 10%, indicating that investors are now opting for ETFs over ETHE.

In conclusion, the approval of spot Ether ETFs has led to a massive outflow of Ether from exchanges, resulting in a decline in exchange reserves and a potential supply squeeze. The price of Ether has also been impacted, with a surge in price following the announcement of ETF approvals. The decline in the premium of ETHE indicates that investors are now opting for ETFs over other investment vehicles.

Market Reactions and Future Outlook

 

Crypto exchanges react to $3B Ethereum exit post-ETF approvals. Uncertain future outlook. Market turmoil depicted with charts, graphs, and worried traders

Analyst Insights and Predictions

 

The recent withdrawal of over $3 billion worth of Ether from centralized crypto exchanges since the approval of spot Ether exchange-traded funds (ETFs) on May 23, has raised concerns among crypto analysts. Some experts predict that the demand pressure for Ethereum will continue to increase, leading to a potential supply squeeze in the near future.

According to a recent report by Grayscale’s Ethereum Trust, the demand for Ethereum has been steadily increasing, driven by the growing adoption of decentralized finance (DeFi) applications. This trend is likely to continue, as more investors seek to diversify their portfolios and allocate a portion of their assets to cryptocurrencies.

However, some analysts also caution that the recent surge in demand for Ethereum may be short-lived, as investors may shift their focus to other cryptocurrencies such as Bitcoin, which has also seen a significant increase in demand in recent months.

Investor Sentiment and Self-Custody Trends

 

The recent withdrawal of Ether from centralized exchanges has also led to a surge in self-custody trends among investors. Self-custody refers to the practice of holding cryptocurrencies in a personal wallet, rather than on a centralized exchange. This trend has been driven by concerns over the security of centralized exchanges, as well as the desire for greater control over one’s assets.

The increase in self-custody trends is likely to continue, as more investors seek to take control of their assets and reduce their reliance on centralized exchanges. This trend may also lead to a shift in the dynamics of the crypto market, as investors become more decentralized and less reliant on centralized exchanges.

Overall, the recent withdrawal of over $3 billion worth of Ether from centralized exchanges has raised concerns over the future supply of Ethereum. While some analysts predict a potential supply squeeze in the near future, others caution that the recent surge in demand for Ethereum may be short-lived. The increase in self-custody trends among investors is also likely to continue, leading to a more decentralized crypto market.

By Jastra Kranjec

Jastra is an author at CryptoPresales. Over the years, she has worked in different fields of journalism and public relations, including politics, economy, crypto, and financial markets.