The supply of Bitcoin and Ethereum on centralized exchanges has hit record lows 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 cause withdrawals
Market experts have explained that the falling exchange rates coincide with the Securities and Exchange Commission (SEC) approval of ETF products for Bitcoin and 19-b filings for Ethereum.
Hello Apollo facts reveals that spot Bitcoin ETFs have accumulated 857,700 BTC, worth $58.5 billion, in just five months. BlackRock’s IBIT ETF leads this acquisition with about $20 billion in assets, followed by Fidelity’s FBTC, with about $11 billion.
Although spot Ethereum ETFs have not yet started trading, investor anticipation has led to significant pullbacks. According to CryptoQuant factsSince the SEC’s approval, 777,000 ETH, worth approximately $3 billion, have been delisted from exchanges.
Moreover, the option to stake ETH has affected the falling exchange rate. Nansen reports that currently 32.8 million ETH, or 27% of the total supply, has been deployed to support the network.
Is a supply crisis coming?
If the downward trend in exchange rates continues, market experts have predicted that demand for Bitcoin and Ethereum could lead to a supply crisis.
In a recent post on social media, BTC Echo editor Leon Waidmaan says advised Investors should brace for a ‘supply squeeze’ and the possibility of ‘the next big thing’.
Historically, this indicates that when digital assets are delisted from exchanges, investors plan to hold them rather than sell them, reflecting bullish sentiment and expectations of future growth. A supply squeeze could significantly impact prices by limiting available supply, potentially leading to significant price increases if current accumulation trends continue.