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Ethereum Balance Across Crypto Exchanges Drops to Lowest in Eight Years

By:
Yashu Gola
Published: Jun 16, 2024, 08:21 GMT+00:00

Key Points:

  • The amount of ETH held on exchanges has dropped to an eight-year low, signaling reduced selling pressure and increased interest in holding ETH.
  • Despite the ability to withdraw staked ETH post-Shanghai upgrade, users continue to stake their ETH.
  • The potential approval of spot Ether ETFs by the SEC, expected by July, could drive institutional investment, potentially pushing ETH prices toward $4,000 and beyond in the coming months.
Ethereum coins, FX Empire

In this article:

Major Ethereum Price Boost in Coming Weeks?

On June 14, the Ether reserves across all the crypto exchanges dropped to over 12.217 million ETH for the first time since July 2016. This data shows that more and more traders are moving their Ethereum holdings toward offline wallets.

Ethereum exchange balance across crypto exchanges. Source: Glassnode

The period of rising Ether outflows from crypto exchanges has largely coincided with the cryptocurrency’s rising prices, suggesting reduced selling pressure and higher demand for holding Ethereum in private wallets or decentralized protocols.

For instance, the official Ethereum staking address has consistently grown in its holdings since its introduction in December 2020, holding over 46.27 million ETH as of June 15, almost four times the ETH amount the exchanges hold. This growth is despite Ethereum’s Shanghai upgrade in March 2023, which removed the need for ETH stakers to lock their tokens indefinitely.

Ethereum proof-of-stake total reserves and effective balance. Source: Glassnode

Simply put, the fact that most users have not withdrawn their staked ETH, even though they now have the ability to do so at any time, indicates that they prefer the benefits of staking. These benefits include stability and earning rewards rather than selling or liquidating their holdings, suggesting that traders are bullish on Ether’s prices for the coming weeks.

Ether ETF FOMO is Boosting The Upside Outlook

The growing upside sentiment for Ethereum appears in the wake of the Securities and Exchange Commission’s (SEC) potential approval for the first spot Ether exchange-traded funds (ETF) in the United States.

Bloomberg analyst Eric Balchunas has updated the timeline for the anticipated launch of the spot Ethereum ETF, now setting a tentative date of July 2. This revision follows recent positive feedback from SEC staff to the issuers of the S-1 filings, indicating that the review process is progressing well with only minor comments to address.

Source: X

Balchunas noted that the SEC is accelerating its review, aiming to declare the filings effective before the holiday weekend. This timeline aligns with SEC Chair Gary Gensler’s testimony during the Senate Appropriations Committee Hearing, where he estimated approvals “over the course of this summer.” Senator Bill Hagerty also mentioned that the process should be completed by the “end of the summer.”

The approval of Ether ETFs is expected to provide institutional investors with a regulated way to invest in crypto assets, potentially increasing traditional investment in these markets.

K33 Research estimates that U.S. spot ETFs could accumulate approximately 1 million ETH within five months of launch, further explaining why traders are withdrawing their ETH holdings from exchanges en masse.

Ethereum Price Prediction: Bounce Toward $4,000 Next?

From a technical viewpoint, Ether is treading near the lower trendline of its prevailing ascending channel trend, eyeing a sharp bounce toward the upper trendline by Jully. In doing so, the cryptocurrency can reclaim its all-time high above $4,000, as shown below.

ETH/USD daily price chart. Source: TradingView

Meanwhile, a clear break above $4,000 could send the ETH price toward its 1.618 Fibonacci retracement line at around $4,800 by August. This upside target further coincides with the ascending channel’s upper trendline.

Conversely, a breakdown below the channel’s lower trendline risks sending the ETH price toward its 200-day exponential moving average (200-day EMA; the blue wave) at around $3,000—down about 15% from current price levels—by July’s end.

About the Author

Yashu Gola is a journalist focusing on cryptocurrency markets since 2014. He writes for Cointelegraph and CoinChapter and has previously served as the chief editor for NewsBTC.

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