A Steady Shift Away From Exchanges

Over the past few years, a consistent decline has been observed in ETH balances across centralized exchanges. Since mid-2020, available exchange supply has fallen by nearly 50%. More recently, since mid-July, exchange balances have dropped another 20%, pointing to accelerating withdrawals.

Data from CryptoQuant shows that ETH held on exchanges now represents only 14% of the total supply — the lowest ratio since 2016. This typically signals that investors are moving their holdings into cold storage, staking pools, or DeFi platforms to earn yield, rather than keeping them on trading platforms.

Record Net Outflows Point to Long-Term Holding

Exchange outflows are also hitting historic levels. According to CryptoQuant, the 30-day moving average of ETH net flows recently reached its highest point since late 2022. Glassnode reported that, on a single day this week, net outflows reached 2.18 million ETH — a figure surpassed only five times in the past decade.

Analysts suggest that this behavior reduces short-term selling pressure and underscores a broader shift toward long-term holding strategies.

Institutional Treasuries Continue Accumulating ETH

One of the main drivers behind the accelerated outflows has been corporate treasuries aggressively buying Ethereum. Since June, firms such as BitMine — chaired by Tom Lee — have significantly expanded their ETH holdings, with BitMine alone now controlling over 2% of the total supply.

Reports from StrategicEthReserve show that, since April, around 68 entities have acquired 5.26 million ETH, valued at roughly $21.7 billion. Collectively, this represents 4.3% of the entire supply. Notably, the majority of these holdings are being staked rather than left idle on exchanges.

Rising Demand Through Spot ETFs

Spot Ethereum ETFs in the United States have also experienced strong inflows. Current ETF holdings have reached 6.75 million ETH — worth nearly $28 billion — equivalent to 5.6% of the total supply.

When combined with institutional treasuries, this means that nearly 10% of all ETH in circulation has been absorbed by large-scale entities, with demand accelerating over the past few months.

Analysts Dub It Ethereum’s “Wall Street Glow-Up”

The growing interest from major financial players has led analysts to describe this shift as Ethereum’s “Wall Street glow-up.” Rachael Lucas, an analyst at BTC Markets, noted that treasuries continue to stack ETH, exchange reserves have dropped to historic lows, and Tom Lee has even projected a year-end price target between $10,000 and $15,000.

Despite these bullish signals, Ethereum has faced short-term price pressure. ETH has fallen more than 11% over the past week, dipping below $4,100.

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The launch of DeepSeek increased selling pressure in the crypto market, causing Bitcoin’s value to drop to as low as $97,713. However, Bitcoin quickly rebounded, surpassing the $100,000 mark once again.

As of the new trading day, Bitcoin is trading at $102,815, while Ethereum stands at $3,194.

The total market capitalization of cryptocurrencies has reached $3.44 trillion, with Bitcoin’s market value calculated at $2.03 trillion and Ethereum’s at $385 billion.

Million-Dollar Outflows in Bitcoin and Ethereum ETFs

On January 27, spot Bitcoin ETFs recorded total net outflows of $457 million. This marked the first instance of net outflows following seven consecutive days of net inflows.

Fidelity Bitcoin ETF (FBTC) faced the largest outflows at $286 million, followed by Grayscale Bitcoin ETF (GBTC) with $108 million in outflows.

On the same day, Ethereum spot ETFs also experienced total net outflows of $136 million. Grayscale Ethereum ETF (ETHE) recorded a single-day outflow of $84.22 million, while Fidelity Ethereum ETF (FET) saw an outflow of $68.46 million.

Trump’s WLFI Project Seizes the Opportunity

Taking advantage of yesterday’s dip, Trump’s WLFI project purchased $10 million worth of Ethereum.

The DeFi project World Liberty Financial (WLFI), supported by the Trump family, executed a significant transaction by purchasing 3,247.3 ETH at a price of $3,079, totaling 10 million USDT. This move highlights WLFI’s ongoing strategy to diversify its portfolio.

The project has invested $275 million across seven cryptocurrencies. The portfolio allocation shows a strong preference for major cryptocurrencies, with 65% in ETH and 25% in BTC, making up 90% of the total investments. The remaining 10% is distributed among five altcoins.

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Industry leaders and other participants told Reuters the SEC “could approve exchange traded funds tied to the spot price of ether as soon as July 4, as talks between asset managers and regulators enter the final stages,” the report published Wednesday said.

Acting SEC chair Gary Gensler said on Tuesday that the Ethereum ETF launching process was “going smoothly.” VanEck also registered a Form 8-A for its Ethereum ETF that same day, perhaps suggesting that the product would soon be trading on an exchange.

Launching by July 4 closely matches the forecasts of Senior ETF analyst Eric Balchunas of Bloomberg.

Last month, the SEC approved forms for eight Ethereum ETFs, 19b-4 forms. Companies trying to introduce the new financial products wait for their S-1s, or registration statements, to be effective before trading starts.

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Data from SoSoValue shows that Fidelity’s FacebookTC, valued at $19 million, had the biggest net inflows of the day. With net inflows of $4 million, Grayscale’s GBTC had its first positive flow since June 5. VanEck also recorded $3 million in inflows on Wednesday.

Ark Invest and 21Shares’ ARKB, in the in the meantime, noted the sole daily net outflows totaling $5 million. BlackRock, Bitwise, Valkyrie, and others saw zero flows.

Since their January introduction, the bitcoin ETFs have garnered $14.44 billion in cumulative net inflows.

Reuters reported Wednesday, citing unidentified sources, that the U.S. Securities and Exchange Commission might approve spot Ethereum ETFs as soon as next Thursday, or July 4. Senior Bloomberg ETF analyst Eric Balchunas had earlier projected a likely debut date of July 2.

Though not specifying a certain date, SEC chairman Gary Gensler indicated earlier this week that the spot ETF launch process is “going smoothly.” Last month, the regulatory agency approved spot ether ETFs preliminary; it is presently assessing the revised registration statements from issuers.

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Bitfinex head of derivatives Jag Kooner informed The Block that “forecasts show that spot Ethereum ETFs could capture between 10 and 20% of the flows that have been going into spot bitcoin ETFs.” Still, Kooner said he thinks a lot depends on future clarification on staking being permitted or rejected by the U.S. Securities and Exchange Commission for spot Ethereum ETFs.

To balance their exposure, the Bitfinex analyst gave a historical case of how fund managers split money between many similar ETFs. “The introduction of gold ETFs provides a historical parallel since they drew large investments when first launched, therefore influencing the inflows into current financial products connected to gold. Likewise, the launch of Ethereum ETFs could see fund managers shifting money to balance their exposure to both bitcoin and Ethereum,” he said.

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Kooner gave a particular case study of how fund managers had in the in the past diversified their ETF portfolios in order to distribute risk and maybe improve results.

“The first gold spot ETF was introduced in November 2004, when the SPDR Gold Trust (GLD) debuted on the New York Stock Exchange. This ETF revolutionized gold trading by providing a convenient and liquid way for investors to gain exposure to gold without the need to physically hold the metal,” Kooner said.

Kooner also noted that investors added these holdings and redirected money to them, especially because of the growing need for silver for industrial uses, when silver ETFs were first launched—the iShares Silver Trust in 2006.Given Ethereum’s usage cases, “the same may hold true for spot Ethereum ETFs,” he said.

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Lance Vitanza, an analyst from the investment bank TD Cowen, pointed out two crucial drivers that could initiate a new cycle of positivity in the crypto market.

One of such drivers, according to the analyst, will be the repositioning of more spot Bitcoin exchange-traded funds (ETFs) in the future. The expert further said that new life would be given to the industry due to the growth of institutional adoption and acceleration of money flow.

Yet, he emphasized that this second catalyst is as crucial as the first one. He predicted that if spot Ethereum ETFs, which have been the topic of discussion in recent days, are allowed by the SEC, there may be jaw-dropping increases for alternative cryptocurrencies.

This is important as despite the future of Ethereum being unknown until 2025 or even further into the future, we think there is a significant amount of capital waiting for a digital winner to be revealed.

P.S This text does not contain investment advice

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In a statement, the SEC said it is seeking public input on whether the concentration of control or influence of Ethereum based on its PoS protocol by a particular group or entity would make the fund susceptible to fraud or manipulation.

The SEC also has questions about futures Ethereum products. The agency asked for public comment on the matter within 21 days.

The SEC had previously delayed its decision until December 5.

The SEC also delayed decisions on spot Ethereum ETFs for Fidelity last week and for BlackRock, which filed an application yesterday.

Some experts in the market have expressed their opinion that a spot Ethereum ETF could be approved soon. However, others do not expect this to happen before May. Bloomberg ETF analyst James Seyffart warned investors recently, saying that the delay in spot Ethereum ETFs could continue for a few more months.

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