Bitcoin
Bitcoin and Ethereum on exchanges fall to new lows, what a reduction in supply would mean for the market – TradingView News
Recent data shows that the supply of Bitcoin (BTC) and Ethereum (ETH) on exchanges has dropped significantly. This means the largest crypto tokens by market cap could be well poised for significant moves higher, with a supply squeeze imminent.
Bitcoin and Ethereum supply drops to new lows
BTC ECHO analyst Leon Waidmann shared data from Glassnode, which showed that Bitcoin and Ethereum exchange balances are at their lowest levels in years. The supply of Bitcoin on exchanges fell to 11.6%, while the supply of Ethereum fell to 10.6%. This suggests that crypto whales have been accumulating these crypto tokens and transferring them into self-custody.
Waidmann highlighted the importance of this development, noting that a supply constraint was imminent. This supply squeeze could help push up Bitcoin and Ethereum prices, as most investors appear to be accumulating at this time rather than unloading their holdings. In line with this, the analyst urged his followers to “prepare for the next big move”.
Interestingly, crypto analyst Ali Martinez suggested that this movement could have started after the approval of Spot Ethereum ETFs. He stated in an X (formerly Twitter) post that nearly 777,000 ETH ($3 billion) has been withdrawn from cryptocurrency exchanges since the Securities and Exchange Commission (SEC) approved these funds.
Once they finally launch, these Spot Ethereum ETFs are expected to go into full swing. As such, it is not surprising that these crypto whales seek to position themselves at the forefront of this development. Bloomberg analyst Eric Balchunas predicted that these funds will likely begin trading in July.
However, research firm Kaiko warned that these funds may not instantly send the price of Ethereum to new all-time highs (ATHs). The second-largest crypto token will likely face significant selling pressure thanks to potential outflows from Grayscale’s Spot Ethereum ETF. This builds on the $6.5 billion outflows that Grayscale’s Spot Bitcoin ETF recorded in its first month of trading, which led to a significant decline in the price of Bitcoin.
ETH could reach a new all-time high in record time
Crypto analyst Michael Nadeau suggested that Ethereum could still reach a new ATH once Spot Ethereum ETFs start trading faster than Bitcoin following the launch of Spot Bitcoin ETFs. He noted that Ethereum does not have the same amount of “structure selling” that Bitcoin encounters, since ETH validators do not need to sell their holdings to offset operational costs, unlike Bitcoin miners.
He also highlighted that 38% of Ethereum’s supply is locked in the network and stated that “ETH is more reflective than BTC.” He further explained that this reflexivity is evident in the way Ethereum leads on-chain activity, which leads to more ETH burning. Considering this, Grayscale exits may not impact the price of Ethereum like they did the price of Bitcoin, which could see the second-largest crypto token reach a new ATH in short order.