The impending launch of Ethereum exchange-traded funds (ETFs) has sparked significant speculation within the crypto market. It’s reminiscent of the anticipation and subsequent impact seen with Bitcoin ETFs. According to Matt Hougan, Chief Investment Officer (CIO) at Bitwise, these ETFs could potentially exert a profound influence on the price of Ethereum (ETH). Moreover, he expects it to drive Ethereum price to a new all-time high.
Ethereum ETF Launch Impact On Ether Price
Hougan predicts that while the initial weeks post-launch may be volatile for Ethereum. He expects potential outflows from existing investment vehicles like the Grayscale Ethereum Trust (ETHE), the long-term outlook remains bullish. However, he stated, “By year-end, I’m confident the new highs will be in. And if flows are stronger than many market commentators expect, the price could be much higher still.”
The Securities and Exchange Commission (SEC) has already approved 19b-4 forms for eight Spot Ethereum ETFs. These include major financial institutions like BlackRock, Bitwise, Fidelity, and VanEck among others. These approvals mark a significant step towards the introduction of ETFs that could potentially attract substantial institutional and retail investment.
Hougan draws a comparison to Bitcoin
, noting that since the launch of ETFs, the funds have purchased significantly more BTC than miners have produced. This influx of institutional capital has been a driving force behind Bitcoin’s price surge of approximately 40% since the ETFs’ launch and over 100% since markets began pricing in their approval in late 2023.
However, Hougan argues that the impact on ETH could be even more pronounced for several reasons unique to the Ethereum ecosystem. Unlike Bitcoin, ETH has maintained a near-zero short-term inflation rate over the past year. Hougan explained, “That meant we needed $16 billion of bitcoin buying per year just to tread water.”
Also Read: Impact of Ethereum ETF Approval on Crypto Market: Trends and Industry Challenges
A Sell The News Event?
Moreover, Ethereum operates on a proof-of-stake protocol, where stakers do not face the same imperative to sell newly acquired assets to cover operational costs as Bitcoin miners do. This difference could alleviate selling pressure on Ethereum, potentially allowing price appreciation to outpace that of Bitcoin in response to ETF inflows.
Furthermore, a substantial portion of Ethereum’s supply is locked up either in staking contracts or decentralized finance (DeFi) applications. This makes it less available for immediate sale. Hence, Hougan estimates that approximately 40% of Ethereum is currently “somewhat or completely unavailable for sale.”
Looking ahead, Hougan anticipates that successful Ether ETF launch could lead to significant inflows. It could potentially challenge Ethereum’s previous price records. He predicts, “If the spot Ethereum ETFs are successful, seeing the level of inflows the Bitwise CIO anticipates, given these dynamics, it’s hard to imagine ether not challenging its old record.”
As of the latest trading data, Ethereum price stood at $3,486.93, gaining over 2%. In addition, the market is optimistic on the smooth ETF launch on Tuesday, July 23. Hence, Ether whales like TRON founder Justin Sun have been ramping up ETH. While the the ETF launch may not be a sell the news event on a large scale, some whales might capitalize on the price increase once these funds start trading.
Also Read: Ethereum ICO Wallets Deposit 3,631 ETH into Kraken Ahead of Ether ETF Approval
