Supply shock in Ethereum: It can shape the fate of altcoins

Since the approval of spot Ether exchange-traded funds (ETFs) in the US on May 23, there has been an outflow of Ether worth more than 3 billion dollars from centralized crypto exchanges, signaling a potential upcoming supply crunch.

According to CryptoQuant data, the amount of Ether on exchanges dropped by approximately 797,000 between May 23 and June 2, equivalent to 3.02 billion dollars. The amount of Ether on exchanges dropped by approximately 797,000 between May 23 and June 2, equivalent to 3.02 billion dollars.

Glassnode data shared by BTC-ECHO analyst Leon Waidmann shows that the percentage of circulating Ether supply held on exchanges is at its lowest level in recent years, at only 10.6%.

Ethereum ETFs pave the way to ATH

Last week, Bloomberg ETF analyst Eric Balchunas predicted that Ether ETFs could be launched by the end of June. Some analysts believe that with the increasing demand pressure for spot Ether ETFs, Ether could break the all-time high of $4,870 in November 2021.

DeFi report In a May 28 report, crypto analyst Michael Nadeau said that Ether could benefit more from demand pressure than Bitcoin because it doesn't have the same level of "structural selling pressure." For example, Bitcoin miners occasionally have to sell BTC to cover their mining costs, while Ethereum validators do not incur the same operating expenses as Bitcoin miners.

However, there are concerns that Ether's price movement could be affected if Grayscale Ethereum Trust (ETHE), which manages an $11 billion fund, follows Grayscale Bitcoin Trust (GBTC) which saw a $6.5 billion outflow in the first month after approval.

This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should conduct their own research when making decisions.