The recent increased institutional demand for Ethereum and the treasury company strategy has pushed the price very close to its 2021 ATH.
Just when ETH was expected to break its 2021 ATH, it was postponed to another spring again as macro data from the US negatively affected the market.
However, an analysis revealed that Ethereum’s bullish outlook is strengthening due to supply shortages.
Japan-based XWIN Research said that Ethereum’s supply has been shrinking in the face of increasing demand recently, and as the supply has shrunk, ETH has entered a period of strong growth.
Stating that a large amount of ETH has been withdrawn from exchanges, the analysis company said that ETH balances on exchanges have decreased sharply since the end of July.
Analysts noted that daily exchange withdrawals have repeatedly exceeded 100,000 ETH, with the largest withdrawal being 92,899 ETH ($412 million), withdrawn from Kraken about a week ago.
In addition, analysts pointed out that spot ETH ETFs recorded a record weekly inflow of $2.85 billion, and said that all these factors support the strong bull case for ETH.
“With a large amount of ETH being withdrawn from exchanges, ETF and institutional buying pressure is increasing significantly.
Ethereum is in short supply, with the current exchange balance only around 18.4 million.
As a result, the supply of Ethereum is gradually shrinking due to decreasing exchange supply and increasing institutional demand.
If this trend in Ethereum continues, there is a high probability that a strong supply shortage-fueled bull market will emerge towards the end of the year.”
Coinbase Head of Research David Duong also stated that the outlook for Ethereum is positive. He noted that current data suggests that demand for Ethereum remains strong, and that ETH treasury companies are driving demand.
At this point, Duong noted that since the beginning of August, DATs have purchased a total of 795,000 ETH (worth approximately $3.6 billion), securing 2% of the total supply.
Finally, Duong emphasized that these companies may continue to make additional large-scale Ethereum purchases and contribute to the rise.
*This is not investment advice.
