Bitcoin, Ethereum On Exchanges Drop To New Lows, What A Supply Squeeze Would Mean For The Market
04 June 2024 - 4:00AM
NEWSBTC
Recent data shows that the supply of Bitcoin (BTC) and Ethereum
(ETH) on exchanges has dropped significantly. This means the
largest crypto tokens by market cap could be well-primed for
significant moves to the upside, with a supply squeeze
imminent. Supply Of Bitcoin And Ethereum Drop To New Lows BTC
ECHO analyst Leon Waidmann shared Glassnode data, which showed that
exchange balances for Bitcoin and Ethereum are at their lowest in
years. Bitcoin’s supply on exchanges has dropped to 11.6%, while
Ethereum’s supply has dropped to 10.6%. This suggests that crypto
whales have been accumulating these crypto tokens and moving them
to self-custody. Related Reading: Dogecoin Whales Buy $112
Million Worth Of DOGE As Crypto Investors Turn Their Attention To
Meme Coins Waidmann highlighted the significance of this
development, noting that a supply squeeze was imminent. This supply
squeeze could help drive up the prices of Bitcoin and Ethereum
since most investors look to be accumulating at the moment rather
than offloading their holdings. In line with this, the analyst
urged his followers to get “ready for the next big move.”
Interestingly, crypto analyst Ali Martinez suggested that this move
might have begun following the approval of the Spot Ethereum ETFs.
He stated in an X (formerly Twitter) post that almost 777,000 ETH
($3 billion) have been withdrawn from crypto exchanges since the
Securities and Exchange Commission (SEC) approved these
funds. Once they finally launch, these Spot Ethereum ETFs are
expected to kick the bull run into full gear. As such, it isn’t
surprising that these crypto whales are looking to position
themselves ahead of this development. Bloomberg analyst Eric
Balchunas predicted these funds will likely begin trading by
July. However, research firm Kaiko has warned that
these funds may not instantly send Ethereum’s price to new all-time
highs (ATHs). The second-largest crypto token will likely face
significant selling pressure thanks to the potential outflows from
Grayscale’s Spot Ethereum ETF. This is based on the $6.5 billion
outflows that Grayscale’s Spot Bitcoin ETF recorded in its first
month of trading, which led to a significant decline in Bitcoin’s
price. ETH Could Hit A New All-Time High In Record Time
Crypto analyst Michael Nadeau suggested that Ethereum could still
hit a new ATH once the Spot Ethereum ETFs begin trading faster than
Bitcoin did following the launch of the Spot Bitcoin ETFs. He noted
that Ethereum doesn’t have the same amount of “structure selling”
that Bitcoin encounters since ETH validators do not have to sell
their holdings to offset operating costs, unlike Bitcoin
miners. Related Reading: Expert Charts 1,400% Course To $7.5
For XRP Price As RSI Falls To All-Time Low He also highlighted that
38% of Ethereum’s supply is locked on-chain and claimed that “ETH
is more reflexive than BTC.” He further explained that this
reflexivity is evident in how Ethereum leads in on-chain activity,
which leads to more ETH burned. Considering this, Grayscale’s
outflows may not impact Ethereum’s price as they did on Bitcoin’s
price, which could cause the second-largest crypto token to hit a
new ATH in no time.
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