Key Points
- Ethereum experienced a challenging Q2 with a decrease in profitability.
- Despite this, Ethereum’s popularity surged following the announcement of Ethereum ETFs.
Challenging Second Quarter for Ethereum
Ethereum’s performance in the second quarter was not as profitable as expected. This was despite an increase in the price and popularity of Ethereum following the announcement of Ethereum ETFs.
According to data from Token Terminal, Ethereum’s Q2 was unprofitable. If these issues with revenue generation persist, it could make it difficult for the network to sell its holdings. However, interest in Ethereum (ETH) remained relatively high.
Withdrawal from Centralized Exchanges
After the approval of spot Ethereum exchange-traded funds (ETFs) in the United States on 23rd May, over $3 billion worth of Ethereum was withdrawn from centralized crypto exchanges. This withdrawal indicated a potential supply squeeze.
Data showed a decrease in the amount of Ethereum on exchanges by around 797,000, or $3.02 billion, between 23rd May and 2nd June. This reduction in exchange reserves suggests that fewer ETH is available for sale as investors move their assets to self-custody for purposes other than immediate selling.
Ethereum’s supply on exchanges was at its lowest level in years, just 10.6%. This reduction in supply, coupled with a surge in demand from investors post numerous ETF approvals could further boost the price of ETH and nudge it towards its all-time high (ATH).
There are concerns, however, that Grayscale’s Ethereum Trust (ETHE), which manages $11 billion in funds, could impact Ethereum’s price action. This is based on the example of the Grayscale Bitcoin Trust (GBTC), which saw $6.5 billion in outflows within the first month of its approval.
Current State of Ethereum
At the time of writing, ETH was trading at $3,833.59 and its price had grown by 1.19% in the last 24 hours. Surprisingly, both whale interest and retail interest dipped slightly over the last few days.
Data revealed that cohorts holding anywhere between 0.01 ETH to 10 ETH had witnessed a decline in overall ETH held by them. Moreover, the addresses holding more than that amount also let go of some of their ETH.
This behavior exhibited by both whales and retail investors indicated that a lot of holders were indulging in some level of profit taking as prices soared. However, the sell-offs have not been significant enough to impact prices negatively.
