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Bitcoin and Ethereum on exchanges fall to new lows, what a supply squeeze would mean for the market
Recent data shows that the Bitcoin (BTC) supply and Ethereum (ETH) on exchanges dropped significantly. This means that larger crypto tokens based on market cap it could be well prepared for significant upward moves, with a supply contraction imminent.
Bitcoin and Ethereum supply drops to new lows
BTC ECHO analyst Leon Waidmann shared data from Glassnode, which proves this exchange balances as Bitcoin and Ethereum are at their lowest levels in recent years. Bitcoin’s supply on exchanges fell to 11.6%, while Ethereum’s supply fell to 10.6%. This suggests it Crypto whales they accumulated these crypto tokens and transferred them into self-custody.
Waidmann underlined the importance of this development, noting that a reduction in supply was imminent. Since then, this supply squeeze could help push up the prices of Bitcoin and Ethereum most investors they appear to be accumulating at the moment rather than unloading their holdings. In line with this, the analyst urged his followers to prepare “for the next big move”.
It is interesting to note that crypto analyst Ali Martinez suggested that this move may have begun to follow the approval of Spot Ethereum ETFs. He declared in an X (ex Twitter) send that nearly 777,000 ETH ($3 billion) has since been withdrawn from cryptocurrency exchanges Securities and Exchange Commission (SEC) approved these funds.
Once finally launched, these Ethereum Spot ETFs are expected to take off the bull runs at full speed. Therefore, it is not surprising that these cryptowhales are trying to position themselves ahead of this development. Bloomberg analyst Eric Balchunas predicted that these funds will likely begin trading by July.
However, research firm Kaiko has warned that these funds may not immediately send the price of Ethereum to new all-time highs (ATH). The second-largest crypto token will likely face significant selling pressure thanks to potential outflows from Grayscale’s Ethereum Spot ETF. This is based on outflows of $6.5 billion Grayscale Bitcoin Spot ETF recorded in its first month of trading, which led to a significant drop in the price of Bitcoin.
ETH could reach a new all-time high in record time
Crypto analyst Michael Nadeau suggested that Ethereum could yet reach a new ATH once Ethereum Spot ETFs start trading faster than Bitcoin following the launch of the Spot Bitcoin ETF. He noted that Ethereum does not have the same amount of “structure sales” that Bitcoin encounters since ETH validators do not have to sell their holdings to compensate operating costsunlike Bitcoin miners.
He also pointed out that 38% of Ethereum’s supply is locked on chain and said that “ETH is more reflective than BTC.” He further explained that this reflexivity is evident in the way Ethereum drives on-chain activity, which leads to something more ETH is burned. Considering this, Grayscale outflows may not impact the price of Ethereum like they did the price of Bitcoin, which could cause the second largest crypto token to reach a new ATH in no time.
