- The spot Ethereum ETF could reportedly launch as early as July 22.
- Wall Street analysts are divided on how this will affect Ethereum.
- Most are keeping an eye on the inflows into the new ETF to determine what impact it will have on Ethereum price.
A spot Ethereum exchange-traded fund is on the way, and its historic debut should mark another big win for the cryptocurrency industry.
But it’s not clear what that means for the token itself.
Wall Street has offered mixed predictions on how the world’s second-largest cryptocurrency will perform after the ETF launches. Starting Tuesday, July 22nd.
Optimism about the fund’s creation was driving a bull market even before the Securities and Exchange Commission approved it in May.
Standard Chartered Bank has predicted since March that Ether will hit $8,000 by the end of the year. The bank expects these funds to bring in between $15 billion and $45 billion worth of Ether over the next 12 months.
As of Friday, Ethereum was trading just under $3,500, putting it on track for a rise of over 130%.
Bulls took confidence from Bitcoin’s performance following the launch of a Bitcoin spot ETF in January. Money is flowing into these funds By early 2024, Apex Token had risen by over 73%, reaching an all-time high of $73,780 in March.
But opinions are divided on whether that momentum will materialize for Ethereum.
JPMorgan’s Nikolaos Panigirtzoglou noted in late May that inflows into an Ethereum ETF would likely be a fraction of Bitcoin’s.
Citi released a similar forecast this month, predicting that ETF inflows would account for 30-35% of Bitcoin inflows, which equates to $4.7 billion to $5.4 billion over the next six months, the report said. Coindesk.
To back this up, the two banks outlined some of the same factors, pointing to Bitcoin’s first-mover advantage and emphasizing that Ethereum tokens offer features that cannot be accessed through ETFs, limiting demand.
For example, ETF investors will no longer have access to ether staking, a feature where tokens are locked in exchange for yield.
But some people think these predictions are too pessimistic. Shorthand research Strong inflows have led to Ethereum being predicted to hit $6,500 this year.
“The market outlook for a future Ethereum physical ETF is overly pessimistic. We expect Ethereum’s appealing qualities to Wall Street will drive net inflows of $15 billion to $20 billion in the first year,” the firm said. “This should result in a significant increase in the value of Ethereum, not only in dollar terms but also relative to Bitcoin.”
Sources who spoke to Reuters He also noted that Ethereum’s liquidity is much more constrained than Bitcoin’s due to yield limits and other factors.
According to Galaxy Digital, this means Price sensitivity to inflowsIn other words, the token could achieve substantial gains even if it doesn’t match the inflows into spot bitcoin funds.
“Despite the uncertainty around ETH ETF acceptance, capturing 10-20% of Bitcoin ETF flows could propel ETH above 4,000 and closer to a peak of 4,800.” QCP Capital posted on Telegram Mid-June.
Supply considerations are one of the main reasons why Synfutures CEO Rachel Lin predicted that Ether could surge to $22,500 this cycle. In a May note, she explained that Ether’s supply has remained stable at 120 million since 2022, while Bitcoin’s supply continues to grow.
But regardless of how net inflows and supply will affect Ethereum’s price in the coming months, some say the ETF’s immediate impact may disappoint investors.
“Price volatility will likely be limited over the first few days as we see a slow rotation from crypto exchanges into ETFs rather than a sudden inflow,” Alex Kuptsikevich, senior market analyst at FxPro, told Business Insider.
He added, “But in a broader perspective, Ethereum is just a second cryptocurrency that investors can easily add to their portfolios. It’s possible that Ethereum’s relative weighting will increase in the first two months after the ETF launches.”
