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Ethereum Exchange Liquidity Draining Fast, What This Means For ETH Price

Published

7 months ago

June 2, 2024

The balance of Ethereum (ETH) on centralized exchanges is dropping at a fast rate since the United States Securities and Exchange Commission (SEC) approved spot Ether ETF products.

Ethereum Liquidity Drain

Centralized trading platforms are regarded as the primary avenue through which most traders get access to cryptocurrencies, including Ethereum. The availability of this coin is already being threatened as hinted by top market analyst Ali Martinez.

In a recent post on X, Martinez noted that since the spot Ethereum ETF products were approved in the US, approximately 777,000 ETH, valued at about $3 billion have been withdrawn from crypto exchanges. While the ETH ETF products are yet to start trading officially on exchanges, a sustenance of this trend might play a major role in shaping the price action of ETH in the long term.

Since the @SECGov approved spot #Ethereum ETFs, approximately 777,000 $ETH — valued at about $3 billion — have been withdrawn from #crypto exchanges! pic.twitter.com/EzQVC0cw27
— Ali (@ali_charts) June 2, 2024

One intriguing trend in the chart shared by the analyst is that the current Ethereum balance on exchanges is the lowest the coin has recorded since at least December 11 2023. Judging by the massive rate of institutional investment in Bitcoin through its spot ETF products, Ethereum might suffer a supply shock in no time.

Should Ether spot ETF experience a similar accumulation like Bitcoin, it can help shoot the price of Ethereum forward within a very short time. The same experience was recorded for Bitcoin as the corporate capital inflow dragged the price of the coin to a new All-Time High (ATH) above $73,000 in March.

Many market analysts have postulated that all ETH need to breach its former ATH at $4,891.70 is the full launch of the spot Ethereum ETF product. Should the best case scenario play out, Standard Chartered postulates that the coin may soar to $8,000 by the end of this year.

Other ETH Growth Catalysts

Besides the spot ETF product, Ethereum also boasts of different fundamentals that can help drive its price in the long term. The digital currency is naturally deflationary with small amounts of the token scored from transaction fees burnt and taken away from circulation.

As a blockchain, Ethereum is also innovating in a remarkable way with different upgrades and innovation to make its Layer-2 protocols function optimally. When all this factors come together, chances are that the price of Ethereum will break free from its current stagnant trend to print a mega rally moving forward.