Ethereum ETFs will push ETH price above $5K – Bitwise
Hougan predicted that spot Ethereum ETF inflows could drive the price of ether to new record levels above $5,000. However, this surge may not happen immediately.
Reports have it that Ethereum ETFs could launch trade on July 23rd, 2024. Eric Balchunas adds, “Ironic and kinda funny 7/23 is right in the middle of the biggest Bitcoin conf of the year.” The launch of Ether ETFs is said to usher in a bull run and an ETH price surge above $5,000.
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Matt Hougan, the Chief Investment Officer at Bitwise, believes that the launch of spot Ethereum exchange-traded funds could potentially have a more significant impact on ether compared to similar products in the case of Bitcoin.
In a note to clients on Tuesday, Hougan predicted that spot Ethereum ETF inflows could drive the price of ether to new record levels above $5,000. However, this surge may not happen immediately.
Ethereum price is headed for a bull rally
According to him, the initial period following the launch of Ethereum ETFs could be quite volatile for the second-largest cryptocurrency. This is because there is a possibility that funds may be withdrawn from the $11 billion Grayscale Ethereum Trust (ETHE) after its transition into a spot ETF.
Here’s my prediction: ETP inflows will push prices to all-time highs, above $5,000. Not immediately—in fact, I think the first few weeks could be choppy, as money may flow out of the $11 billion Grayscale Ethereum Trust (ETHE) after it converts to an ETP. But by year-end, I’m confident the new highs will be in.
Matt Hougan,
On May 23, the Securities and Exchange Commission gave its approval to eight 19b-4 forms for spot Ethereum ETFs from Bitwise, BlackRock, Fidelity, VanEck, Ark Invest, Invesco, Franklin Templeton, and Grayscale. Nevertheless, the issuers must ensure that their S-1 registration statements are approved before trading can commence.
Hougan cited three key reasons why he thinks Ether ETFs would have a greater impact on the asset’s price: Given the extensive use of Ethereum-based applications, Ether’s inflation rate is virtually zero, as opposed to the “small amount of ETH” issued daily.
In addition, because Bitcoin is “expensive, requiring high-end computer chips and loads of energy,” miners are forced to sell it in order to keep operations running. In comparison, people who stake ETH do not face “significant direct costs.”
Another explanation is that around one-third of all ETH (28%) is staked and held for a length of time. “Currently, 28% of all ETH is staked, meaning it is effectively off the market,” he explained.
The Bitwise CIO previously forecasted that spot Ethereum ETFs would generate $15 billion in net inflows within their first 18 months. This is a slower rate than the Bitcoin ETFs, which reached the net inflow threshold after only five months of trading.
As of this writing, ETH is worth $3,443, up 0.3% from an hour ago and down 1.3% from yesterday. However, the value of ETH today is 10.9% higher than it was seven days ago.
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