Bitcoin and Ethereum prices have been sluggish since March 2024, but recent data reveals a significant decline in exchange holdings.
As major holders accumulate these cryptocurrencies, the reduced supply on exchanges could trigger substantial price increases.
With Bitcoin ETFs already trading and Ethereum ETFs on the horizon, experts anticipate a surge in demand, setting the stage for a potential cryptocurrency price boom in the near future.
Explore the factors contributing to this trend and what it could mean for investors.
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Significant Decline in Cryptocurrency Exchange Holdings
Since around March 2024, the prices of Bitcoin (BTC) and Ethereum (ETH) have been experiencing a downward trend or stagnation.
However, recent reports indicate that the BTC and ETH holdings on cryptocurrency exchanges have plummeted to their lowest levels in several years, driven by large-scale purchases by major holders.
According to Leon Waidmann, an analyst from the cryptocurrency media outlet "BTC-ECHO," referencing data from "Glassnode," the BTC holdings on exchanges have decreased to 11.6%, and ETH holdings have dropped to 10.6%.
Potential for Price Increase Due to Supply Shortage?
The reported percentages indicate the proportion of the total supply of cryptocurrencies held on exchanges. This significant withdrawal of BTC and ETH from exchanges suggests that these assets are being moved for long-term holding rather than immediate trading.
An increase in exchange balances typically raises concerns about potential selling by investors. However, the current trend of withdrawals implies that investors are transferring their assets for long-term storage, which could lead to a supply shortage and subsequently drive a significant price increase for BTC and ETH in the near future.
In January of this year, Bitcoin spot ETFs began trading in the United States. It is anticipated that Ethereum spot ETFs may also start trading around late June to July 2024.
The official commencement of ETF trading is expected to further boost the demand for ETH and BTC.
Experts and analysts in the cryptocurrency industry widely predict that the initiation of ETF trading and the upcoming halving events will create a scenario of increased demand and reduced supply.
This is expected to result in a substantial price increase for cryptocurrencies in the coming months, heightening expectations for future price surges.
>> Click here to read our article on price projections
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