Spot Ethereum ETFs Launching: Will ETH Reach New Highs or Face a Decline?

• The launch of spot Ethereum ETFs on Wall Street by major players like BlackRock, Fidelity, and VanEck has driven Ethereum’s price above $3,500.
• Despite the excitement, crypto expert Benjamin Cohen warns of a potential ETH price crash due to Ethereum’s inflationary trend and increased supply.

The spot Ethereum ETFs are finally live for trading in the US with top players like BlackRock, Fidelity, VanEck, and others listing their Ether ETF shares on Wall Street which directly tracks the ETH price, per the CNF update.

On the day of launch, the Ethereum investors have buckled up taking the Ethereum price above $3,500 once again. As of press time, Ethereum is trading 0.11% up at $3,508 with a market cap of $422 billion.

Although there’s been a lot of excitement around the Ether ETF launch, crypto expert Benjamin Cohen has warned against any ETH price rise and instead predicts an ETH price crash. Cohen points out that the Ethereum cryptocurrency has turned inflationary again along with the sudden surge in the ETH supply over the past three months since April.

Cohen stated that as the Ethereum network activity dropped to new lows, the supply became inflationary due to insufficient transaction fees being burned to offset new supply. Over the last month, the ETH supply increased by 60,000 ETH, according to Cohen.

Cohen notes that if the supply continues to rise at its current rate, it could return to pre-merge levels by December. Unless there is a reversal and the supply becomes deflationary again, this increase could offset the inflows from Spot Ethereum ETFs and potentially drive the ETH price down.

ETH Price Will Be Sensitive to Ethereum ETF Inflows

On Monday, July 22, crypto analytics firm Kaiko published a report stating that the Ethereum price movement will be “sensitive” to the inflows coming into the spot Ethereum ETF in the coming days. “The launch of the futures-based ETH ETFs in the US late last year was met with underwhelming demand, all eyes are on the spot ETFs’ launch with high hopes on quick asset accumulation,” said Kaiko’s head of indexes Will Cai in a July 22 market report.

All eyes will be on the Grayscale Ethereum Trust (ETHE) as investors are willing to see whether it meets the same fate with massive outflows as we saw with GBTC, reported CNF. The conversion of ETHE to a spot ETF will make buying and selling easier for traders, likely prompting many investors who hold ETHE shares to cash out once trading starts on July 23, noted Kaiko.

However, this time Grayscale will also be launching the Ethereum mini Trust which has a 0.15% sponsor fee that will help it compete with top players like Blackrock and others, reported CNF. Crypto market maker Wintermute stated in a July 21 research report that it anticipates Ethereum ETFs will attract between $3.2 billion and $4 billion in inflows during their first year of trading.