Ethereum price recorded a blistering 4% surge over the weekend, as it reached a daily timeframe peak of $3,839 on June 3, bears face more liquidation risk amid shrinking ETH supply.
Ethereum starts June 2024 with a 4% Uptick
Following the 30% price upswing that greeted the Ethereum ETF approvals, many ETH holders entered a profit-taking frenzy in the last week of May, cutting the monthly gains to 24%.
However, as the sell-the-news wave cools off, ETH markets have begun to attract buying momentum in June.
Ethereum Price Action ETHUSD June 2024 | TradingView
As depicted in the yellow shaded area of the chart above, ETH price has increased by 3.7% within the first three days of June. A move that could set the pace for the rest of the month.
While the official launch of the Ethereum ETFs still hangs in the balance, Ethereum continues to struggle to find the next demand surge. However, on-chain data shows that the shrinking supply of ETH coins across exchanges has put bulls in the driving seat once again.
Ethereum Exchange Supply in Rapid Decline
Crypto investors await the official launch of the recently-approved Ethereum ETFs. Instutitional investors accross the US, including Pension funds, Investment houses, Hedge funds, etc are expected to add billions worth of ETH to their portfolio in the coming weeks.
Recent on-chain movements of ETH coins across exchanges suggest that existing ETH holders have started making bullish moves to front-run the positive impact of the ETF inflows.
A vital indication of this Cryptoquant’s Exchange Reserves chart, which shows the real-time changes in ETH balances held across exchange-hosted wallets and trading platforms.
Ethereum Price vs ETH Exchange Reserves | CryptoQuant
There has been a considerable decline in the supply of ETH deposits on exchanges since May 21. The chart above shows that investors held 13.9 million ETH on exchanges as of May 21. But at the time of writing on June 3, the Ethereum exchange supply has now dropped to 13.1 million ETH.
This implies that Ethereum holders have shifted over 800,000 ETH from exchange supply into long-term storage options and staking contracts in the 14 trading days between May 21 and June 3, 2024.
When there’s a dramatic decline in exchange supply, it creates a bullish buzz around the underlying asset for two main reasons. Firstly, it means that existing investors are looking to hold out for long-term gains rather than exploit short-term trading opportunities on exchanges.
More importantly, these 800,000 ETH exchange outflows mean that over $3 billion worth of ETH has been pulled from the short-term market supply within the last two weeks alone.
This puts Ethereum’s price in a prime position to stage a parabolic breakout above $4,200 during the next wave of demand surge.
Asides from the ETF inflows, the upcoming US Non-Farm Payrolls report scheduled for June 7, is another key market event that could impact Ethereum price action in the June 2024.
