Bitcoin and Ethereum exchange balances hit record lows as spot ETFs drive withdrawals


Bitcoin
and

Ethereum
supplies
on
centralized
exchanges
have
hit
record
lows
following
the
introduction
of
crypto-related
spot
exchange-traded
funds
(ETFs)
in
the
United
States.

According
to
Glassnode
data,
Bitcoin
balances
on
exchanges
have
fallen
to
11.6%,
the
lowest
since
December
2017.
Ethereum
balances
are
even
lower
at
10.6%,
the
lowest
since
October
2015.

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Spot
ETFs
trigger
withdrawals

Market
experts
have
explained
that
the
declining
exchange
balances
coincide
with
the
Securities
and
Exchange
Commission’s
(SEC)
approval
of
ETF
products
for
Bitcoin
and
19-b
filings
for
Ethereum.

HeyApollo

data
reveals
that
spot
Bitcoin
ETFs
have
accumulated
857,700
BTC,
valued
at
$58.5
billion,
in
just
five
months.

BlackRock’s
IBIT
ETF
leads
this
acquisition
with
around
$20
billion
in
assets,
followed
by

Fidelity’s
FBTC,
with
approximately
$11
billion.

Spot
Bitcoin
ETFs
Flow.
(Source:
Farside
Investors)

While
spot

Ethereum
ETFs
have
not
yet
begun
trading,
investor
anticipation
has
driven
significant
withdrawals.
According
to
CryptoQuant

data,
777,000
ETH,
worth
about
$3
billion,
have
been
pulled
from
exchanges
since
the
SEC’s
approval.

Additionally,
the
option
to
stake
ETH
has
influenced
its
declining
exchange
balance.
Nansen
reports
that
32.8
million
ETH,
or
27%
of
its
total
supply,
are
currently
staked
to
support
the
network.


Is
a
supply
crunch
on
the
way?

If
the
declining
exchange
balance
trend
continues,
market
experts
have
predicted
demand
for
Bitcoin
and
Ethereum
could
lead
to
a
supply
crunch.

In
a
recent
social
media
post,
BTC
Echo
editor
Leon
Waidmaan

advised
investors
to
brace
for
a
“supply
squeeze”
and
the
possibility
of
“the
next
big
move.”

Historically,
when
digital
assets
are
withdrawn
from
exchanges,
it
suggests
investors
plan
to
hold
rather
than
sell,
reflecting
bullish
sentiment
and
expectations
of
future
growth.
A
supply
squeeze
could
significantly
impact
prices
by
limiting
the
available
supply,
potentially
leading
to
substantial
price
increases
if
current
accumulation
trends
persist.

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Author: Oluwapelumi Adejumo


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