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In the wake of the approval of spot Ethereum exchange-traded funds (ETFs) in the United States on May 23, a significant shift in Ethereum holdings has occurred.
According to data from CryptoQuant, centralized crypto exchanges (CEXes) have seen a withdrawal of approximately 797,000 ETH, equivalent to $3.02 billion, between May 23 and June 2. This substantial decrease in exchange reserves suggests that investors are moving their Ethereum into self-custody, reducing the immediate supply available for sale.
Glassnode data, shared by BTC-ECHO analyst Leon Waidmann, reveals that the percentage of circulating Ethereum supply held on exchanges has reached its lowest level in years, currently standing at just 10.6%. This reduction in available supply on exchanges could potentially contribute to increased demand pressure on Ethereum.
📉 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
Currently, Ethereum is trading at $3,775, with almost no price movement compared to 24 hours ago and a 23% decrease from its all-time high. During a recent interview Bloomberg ETF analyst James Seyffart said that he believes that the approval of spot Ethereum ETFs was likely influenced by political decisions rather than purely financial considerations.
Crypto caught in a political storm
He suggests that the political climate, including actions by the Biden administration and responses from the crypto community, played a significant role in the approval process. Beyond Bitcoin (BTC) and Ethereum, the approval of other crypto ETFs, such as Solana (SOL), is unlikely without significant regulatory changes, according to Seyffart.
The news follows Friday’s announcement by President Biden that he decided to veto a House Joint Resolution that sought to repeal the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). In his veto statement, Biden made it clear that crypto regulation is now seen as a partisan issue:
This Republican-led resolution would inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues.
