If Ethereum supply continues to grow at its current pace, the initial excitement around a spot Ethereum exchange-traded fund (ETF) may fade and Ethereum prices may fall, according to analysts.
“If ETH supply continues to grow by about 60,000 per month as it has since April, supply will return to merger levels by December,” crypto trader and Into The Cryptoverse founder Benjamin Cohen said in a July 19 Xinhua News Agency post. postthe long-awaited merge marks Ethereum’s (ETH) transition to its current proof-of-stake consensus model in September 2022.
Ethereum became deflationary after the merger, resulting in a loss of supply of approximately 455,000 ETH by April 2024.
But since then, supply has increased by about 150,000 ETH, and Cowen argues that if it continues to grow at this rate, it could return to where it was before the merger happened more than two years ago.
“If the ETH supply continues to grow by 60,000 ETH per month, the supply will return to consolidation levels,” Cohen said.
“If 2016 is any different, the final ETH/BTC decline won’t begin until September 2024, at which point the novelty of a spot ETF against BTC may wear off,” he added.
Ethereum price could drop lower than current price in September
He believes that in 1.5 years, the price of Ether will “likely be higher” than it is today, but that it is “quite likely” that it will fall within the next “3-6 months.” At the time of writing, Ether is trading at $3,507, according to CoinMarketCap. data.
Meanwhile, just a few days earlier, on-chain analyst Leon Weidman noted that Ethereum was facing a “supply crunch.”
“Exchange balances have fallen to 10.2% and 39.3% of ETH is locked in smart contracts,” Weidman wrote in a July 16 tweet. postHe claims that most investors don’t realize “how tight” ETH supply is.
CBOE announced on July 19 that five spot Ethereum exchange-traded funds (ETFs) will begin trading on the Chicago Board Options Exchange on July 23, “pending regulatory effectiveness.”
Related: Ether could outperform Bitcoin after spot ETF launches — Silkie
On May 23, the United States Securities and Exchange Commission (SEC) approved rule changes that will allow the listing of several spot Ether (ETH) ETFs.
The five spot Ethereum ETFs scheduled to begin trading are 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.
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