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The amount of Ethereum (ETH) held on cryptocurrency exchanges has dropped to the lowest level in years after the approval of spot ETH ETFs (exchange-traded funds) on May 23, indicating an incoming supply squeeze.
Data from CryptoQuant shows that on June 2 the amount of ETH held on exchanges was worth around $49 billion, down from $52 billion on May 23.
Dropping Ethereum Supply May Trigger An ETH Price Rise
According to crypto market analyst Leon Waidmann, Ether supply on exchanges has dropped to 10.6%.
”Get ready for the next move,” said Waidmann on X.
📉 Exchange balances for both #Bitcoin and #Ethereum are at their lowest levels in years!🔥
Whales continue to accumulate. #BTC on exchanges is down to 11.6% and #ETH is at 10.6%!
Supply squeeze incoming. 📈
Get ready for the next big move. 🚀 pic.twitter.com/u4j13DZBJk
— Leon Waidmann | On-Chain Insights🔍 (@LeonWaidmann) June 2, 2024
Waidmann’s bullish thesis was supported by DeFi Report analyst Michael Nadeau, who predicts ETH will rally to above $4,800 from $3,824 as of 4:59 a.m. EST.
In his analysis, Nadeau said that the launch of spot Ethereum ETFs will drive the price gains.
Analysts predict that ETH ETFs might start trading as early as late June, albeit with lower volumes than attracted by spot Bitcoin ETFs.
But Nadeau said Ether ETFs will have a more positive effect on the price of ETH compared to Bitcoin ETFs on Bitcoin. ETH lacks the “structural sell pressure” that Bitcoin has when miners are forced to sell coins mined to cater for expenses, he said.
Ether also offers a bigger incentive to hold due to the ability to earn yield on staking contracts and decentralized finance (DeFi) applications, he added. As such, Nadeau believes ETH will see high demand once ETFs start trading.
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