Ethereum ETFs have a big impact on ETH price: Bitwise
US spot ether exchange-traded funds will have a rough start, but could have a bigger impact on asset prices than bitcoin ETFs have done for BTC, said Bitwise Chief Investment Officer Matt Hogan.
“After the $11 billion Grayscale Ethereum Trust (ETHE) conversion to ETP, the first few weeks could be brutal as funds may be withdrawn,” said Hugan.
“By the end of the year, I am confident that the new highs will be reached,” he added, reiterating that he does not expect the same kind of selling pressure that Bitcoin (BTC) ETFs faced when trading began in January. 11.
Three reasons why the ETH ETF will be more influential
Hugan gives three main reasons why he believes the Ether ETF will have a significant impact on the asset's value: Ether's inflation will effectively go to zero.
Also, Bitcoin miners are forced to sell Bitcoin to keep operations because they require “expensive, high-end computer chips and a lot of power.” In contrast, people paying ETH do not have “higher direct costs”.
Another reason is that one-third of the total ETH (28%) is loaded and locked for a certain period of time. “Right now, 28% of all ETH is tied to it, which means it's effectively out of the market,” he said.
Eric Balchunas, an ETF analyst at Bloomberg, said Hogan's comments come amid growing interest in the launch of the Space Ether (ETH) ETF, which is expected to launch on July 23.
Ether may reach $5,000 by the end of the year.
Hugan predicts that production will push Ether's price above $5,000 by the end of 2024. That's a 47% increase from its current price of $3,401, according to CoinMarketCap data.
However, if the revenue stream exceeds market expectations, the forecast may be conservative, Hugan said.
“If flows are stronger than many market analysts expect, the price could still be much higher,” said anonymous crypto trader Diane CryptoTrades, who believes the potential inflows into Ether ETFs are low.
Related: SEC approves Grayscale, Proshares spot Ethereum ETFs to trade on NYSE Arca
“My outlook is still a bit more optimistic in terms of ETF flows,” Diane CryptoTrade wrote in a July 17 X post.
He also noted that Ether's price is “sitting above” its 200-day moving average (MA) and will “eventually rebound around the launch of the ETF.”
Meanwhile, anonymous crypto trader Kaleo from Daan CryptoTrades has the opposite opinion – believing that the price will spiral downwards as the Ether ETF launches.
“I'm going to be the contrarian here and say that I believe Ethereum will dip a little bit against BTC next week,” he said.
While Hugan is optimistic that Ethereum will reach $5,000 by the end of the year and beyond, futures traders are betting on a recent decline in Ethereum's price.
A 10% rise to $3,750 would wipe out $1.31 billion in short-term liquidity, but a 10% downside would wipe out $544.39 in long positions, according to CoinGlass data.
Magazine: Bitcoin's $500K Prediction, Spot Ether ETF ‘A Worrying Case' — Thomas Fahrer, X Flame Hall
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
