Bitcoin
Bitcoin and Ethereum exchange balances hit record lows as spot ETFs drive withdrawals
Bitcoin It is Ethereum supplies on centralized exchanges have reached record levels following the introduction of crypto-related spot exchange-traded funds (ETFs) in the United States.
According to data from Glassnode, 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.
Spot ETFs Trigger Withdrawals
Market experts explained that the decline in exchange balances coincides with the Securities and Exchange Commission’s (SEC) approval of ETF products for Bitcoin and 19-b filings for Ethereum.
Hey Apollo data reveals that Bitcoin spot ETFs accumulated 857,700 BTC, valued at $58.5 billion, in just five months. BlackRock IBIT ETF leads this acquisition with around US$20 billion in assets, followed by FBTC da Fidelidadewith approximately US$11 billion.
Spot Bitcoin ETFs Flow. (Source: Farside Investors)
As a location Ethereum ETFs have not yet started trading, investor expectations generated significant withdrawals. According to CryptoQuant data777,000 ETH, worth around $3 billion, has been withdrawn from exchanges since SEC approval.
Furthermore, the option to stake ETH influenced the decline of your exchange balance. Nansen reports that 32.8 million ETH, or 27% of its total supply, is currently staked to support the network.
Is a supply crisis on the way?
If the trend of declining exchange balance continues, market experts have predicted that demand for Bitcoin and Ethereum could lead to a supply crisis.
In a recent social media post, BTC Echo editor Leon Waidmaan advised for investors to prepare for a “supply squeeze” and the possibility of the “next big thing”.
Historically, when digital assets are delisted from exchanges, it suggests that investors plan to hold them rather than sell them, reflecting optimistic sentiment and expectations of future growth. A supply restriction could have a significant impact on prices by limiting available supply, potentially leading to substantial price increases if current hoarding trends persist.