Ethereum
ETH exchange balances hit eight-year low as investors prepare for rally
The analyst cites anticipation of Ethereum spot ETFs as a key factor.
Investors quickly pulled their ETH from exchanges, signaling that they expect Ethereum’s native cryptocurrency to recover in the coming months.
Investors withdrew more than 4.1 million ETH, or $40.21 billion, from exchanges over the past 10 days. This massive withdrawal, which represents approximately 3.3% of the total circulating supply, caused ETH exchange balances to drop below 12 million ETH, the lowest level since March 2016, according to data from Glassnode.
Ryan Lee, chief analyst at Bitget Research, points out that anticipation around the Ethereum ETF is a critical factor.
“Individual and institutional investors believe [the spot ETH ETF] approval will trigger massive demand for Ethereum,” Lee said in an interview. “This explains the proactive accumulation of over 4.1 million Ethereum on trading platforms – a trend I don’t expect to slow down until months after the S-1 filings are approved.”
On May 24, the United States Securities and Exchange Commission green light trading eight spot Ether-backed exchange-traded funds, including the Grayscale Ethereum Trust, the Bitwise Ethereum ETF, and BlackRock’s iShares Ethereum Trust. After approving issuers’ Form 19b-4s, the agency must still approve their Forms S-1 before the products can begin trading.
On June 13, SEC Chairman Gary Gensler testified that the approval of a spot Ethereum ETF could come as early as this summer.
The sharp decline in exchange rate balances
ETH balances on exchanges have fallen below 12 million from their 2020 peak of 33 million, according to Glassnode data.
On Binance alone, ETH balance in May peaked at 4 million but fell to 3.8 million in two weeks, with over 200,000 ETH withdrawn from the platform. Meanwhile, over 300,000 ETH has left Coinbase since May. This is only the fifth time that more than 150,000 ETH has been withdrawn from the exchange.
“These large transactions (made in a single day) range between $400 million and $1.1 billion each,” said CryptoQuant analyst Burak Kesmeci. “It is highly likely that these Ethereum withdrawals are caused by whales.”
Meanwhile, Lee suggests that this move away from exchanges could indicate a strategy to hold on to their assets.
“Large holders also purchase ETH via spot transactions on exchanges and then transfer them to on-chain wallets, waiting for further price increases,” he explained.
Ethereum vs Bitcoin Offer
Unlike Ethereum, Bitcoin provide on exchanges rose to 3 million BTC from 2.67 million BTC in May.
On-chain data revealed a drop in the number of new active addresses for Bitcoin and Ethereum. Ethereum’s new active addresses fell 10% in May to 467,720 addresses, while Bitcoin saw a 27% decline, bringing the total to 252,470.
In May, blockchain data from Nansen Intelligence showed that net inflows to exchanges on May 22 reached 81,840 ETH, worth approximately $306 million – the highest amount recorded in a single day since January 23.
Implications for price stability
Analysts believe that the reduction in ETH liquidity on exchanges could potentially affect its price stability in the short term.
Leon Waidmann, on-chain analyst at BTC Echo, said investors are “filling their bags with ETH for the long term.”
“It’s becoming more and more plausible that Ethereum could lead the next crypto rally,” he said. said.
Lee argues that as the supply of ETH on exchanges dwindles, potential spot ETF issuers looking to acquire Ethereum to support fund subscriptions may find their options limited.
“This factor could influence market sentiment and potentially push prices up to $4,800 in the long term,” he noted.