According to a report by Cointelegraph, since the US Securities and Exchange Commission (SEC) approved key regulatory documents related to Ether spot ETF on May 23, Ether worth over 30 billion US dollars has flowed out of centralized cryptocurrency exchanges, signaling a possible upcoming supply squeeze.
Based on data from blockchain analytics company CryptoQuant, between May 23 and June 2, the amount of Ether on exchanges decreased by approximately 797,000 ETH, equivalent to 30.2 billion US dollars. Lower exchange reserves imply a reduced amount of coins available for sale, as investors move their coins to self-custody wallets rather than keeping them on exchanges for sale.
Data shared by Glassnode analyst Leon Waidmann shows that the circulating supply ratio of Ether held by exchanges has reached its lowest level in years, standing at only 10.6%.
Investors still need to wait for the SEC to approve the S-1 registration statement submitted by fund issuers before they can start trading Ether spot ETF. Some analysts believe that once such ETFs begin trading, Ether prices may surpass the historical high of $4870 set in November 2021, similar to Bitcoin’s situation after the start of spot ETF trading.
However, some are concerned that the conversion of Grayscale Ethereum Trust Fund (ETHE) into an ETF may exert downward pressure on Ether prices. According to a previous report by Zombit, research teams at cryptocurrency data provider Kaiko believe that if ETHE follows a similar pattern to the Grayscale Bitcoin Trust Fund (GBTC) in the first month after conversion, it may experience an average daily outflow of $1.1 billion.
In a report released last week, analysts at JPMorgan expressed that the demand for Ether spot ETF will be significantly lower than similar Bitcoin fund products for various reasons, and they believe that ETHE may see outflows of $10 billion.