Ethereum (ETH) Exchange Volume Drops To 13.7M, ETF Crunch At Play?

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Ethereum (ETH) remains in the spotlight as analysts monitor events on its mainnet and exchanges overall. In the latest discovery, Tom Dunleavy, a Managing Partner at MV Capital hinted at the steep slip in the Ethereum exchange balance. Per his discovery, the exchange balance is now pegged at 13.7 million ETH, the lowest since at least July 2021.

The Ethereum Supply-Demand Imbalance

There has been a lot of pressure for Ethereum to perform. The token powers the most robust Decentralized Finance (DeFi) ecosystem. Despite its growing user base, it is yet to retest its All-Time High (ATH) of $4,891.70. While Ethereum is known to showcase some of the most healthy utility in the market, current outlook suggests a bigger catalyst is about to go live within its ecosystem.

The prospective launch of the spot Ethereum ETF is expected to stir a paradigm shift in the pricing of the token. Though depicting the level of interest by institutional investors remains a difficult task, the involvement of BlackRock and Fidelity Investments changes the story.

These are financial asset managers with proven successes administering different ETF products over the years. Their influence in the spot Bitcoin ETF ecosystem is resounding with billions in inflows that helped the coin hit its ATH.

According to Tom Dunleavy, the 13.7 million ETH marks about 1/3 the quantity hosted by exchanges as of May 2021.

Ethereum balance on exchanges at its lowest level EVER, down to 13.7m, or roughly 1/3 of what was available in May 2021.

Right before we expect 1-2m in demand from the ETH ETFs.

Bullish. pic.twitter.com/7D4XrTfSxj

— Tom Dunleavy (@dunleavy89) May 23, 2024

With the prospective spot Ethereum ETF product, the former Messari Analyst predicted a 1 to 2 million daily demand from this product upon launch. If this materializes, Ethereum on exchanges might be exhausted within weeks, stirring a massive supply crunch that might drive price higher.

Tightening Loose Ends

Ethereum is set to make history today or at most this week with ETF decision in view. While many market analyst’s projection is that this history will be positively tilted toward spot Ether ETF approval, prospective issuers are tightening loose ends that might call for any form of denial.

In order to further align with the stance of the United States Securities and Exchange Commission (SEC), applicants for the product have removed staking provision in their ETF filings. Drawing on spot Bitcoin ETF trend, the SEC has already established its preference for cash creates model and at the moment, issuers are updating 19b-4 filings to confirm with the regulator’s demands.

The hype around Ethereum ETF has pushed the coin up 0.29% at the time of writing to $3,756.43. Notably, Bitcoin is down by 3.44% to $67,669.78 within the same time span.

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