According to a report by Cointelegraph, since the US Securities and Exchange Commission (SEC) approved key regulatory documents related to Ethereum spot ETF on May 23rd, over $3 billion worth of Ether (ETH) has flowed out of centralized cryptocurrency exchanges, indicating a potential supply squeeze.
According to blockchain data analysis firm CryptoQuant, between May 23rd and June 2nd, the amount of Ether on exchanges decreased by approximately 797,000 ETH, equivalent to $3.02 billion. Lower exchange reserves imply a decrease in the amount of coins available for sale, as investors move their coins to self-custody wallets instead of keeping them on exchanges for sale.
Glassnode data shared by BTC-ECHO analyst Leon Waidmann shows that the circulating supply ratio of Ether held on exchanges has also reached its lowest level in years, at only 10.6%.
Investors still have to wait for the SEC to approve the S-1 registration statement submitted by fund issuers before trading Ethereum spot ETF can begin. Some analysts believe that once such ETFs start trading, Ether prices may surpass the all-time high of $4,870 set in November 2021, similar to the case of Bitcoin after the introduction of spot ETFs.
However, some individuals are concerned that the conversion of the Grayscale Ethereum Trust (ETHE) into an ETF may exert downward pressure on Ether prices. According to previous reports by Zombit, research teams from cryptocurrency data provider Kaiko believe that if ETHE follows a similar pattern to the Grayscale Bitcoin Trust (GBTC) after conversion, it may experience a daily outflow of $110 million.
In a report released last week, analysts from JPMorgan expressed that the demand for Ethereum spot ETF would be significantly lower than similar Bitcoin fund products due to various reasons, and they believe that ETHE may experience an outflow of $1 billion.
