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Bitcoin, Ethereum on the Stock Market Drop to New Lows: What Reduced Supply Would Mean for the Market — TradingView News
Recent data shows that the supply of Bitcoin (BTC) and Ethereum (ETH) on exchanges has decreased significantly. This means that the largest crypto tokens by market capitalization may be well poised 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 shows that trading balances for Bitcoin and Ethereum are at their lowest in years. Bitcoin’s supply on exchanges fell to 11.6%, while Ethereum’s supply fell to 10.6%. This suggests that crypto whales have been hoarding these crypto tokens and moving them into self-custody.
Waidmann underlined the importance of this development, noting that a reduction in supply was imminent. This supply squeeze could help push Bitcoin and Ethereum prices higher as most investors appear to be accumulating at the moment rather than offloading their holdings. In line with this, the analyst urged his followers to prepare “for the next big move”.
Interestingly, crypto analyst Ali Martinez suggested that this move may have started after the approval of Spot Ethereum ETFs. He said in a post on X (formerly Twitter) that nearly 777,000 ETH ($3 billion) had been withdrawn from cryptocurrency exchanges since the Securities and Exchange Commission (SEC) approved these funds.
Once finally launched, these Ethereum Spot ETFs are expected to kick off the bull run. 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 warned that these funds may not immediately send Ethereum’s price 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 the $6.5 billion in outflows that Grayscale’s Bitcoin Spot ETF experienced in its first month of trading, which led to a significant drop in Bitcoin’s price.
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 Bitcoin Spot ETFs. 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 offset operating costs, unlike 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 more ETH being 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.