Once the ETF ‘novelty’ wears off, the price of Ether may drop due to increased supply.
If the price of Ethereum continues to rise at its current pace, analysts say it may decline after the initial boom in the Ethereum exchange-traded funds (ETF) area.
“If the supply of ETH continues to increase by ~60k/month as it has since April, the supply will return to convergence by Dec,” crypto trader and founder of Into The Cryptoverse, Benjamin Cowen, wrote in July. 19 X post, citing the long-awaited merger in September 2022 when Ethereum (ETH) transitions to the current proof-of-consensus model.
Ethereum, whose price has fallen since the merger, saw its supply decrease by about 455,000 ETH in April 2024.
However, since then the supply has increased by around 150,000 ETH. If it continues to grow at this rate, Cowen says it could return to where it was two years ago.
“If the supply of ETH continues to increase by 60,000 ETH per month, we will see the supply return to convergence,” said Cowen.
“If 2016 is anything to go by, ETH/BTC's final disclosure won't start until September 2024, which is enough time for the BTC-related spot ETF novelty to wear off,” he said.
The price of Ether may be lower than the current price in September.
He believes that in 1.5 years the price of ether “may be higher” than the current price, but there is a “good chance” that it will decrease in the next “3-6 months”. According to CoinMarketCap data, Ether is trading at $3,507 at the time of publication.
Meanwhile, a few days ago, OnChain analyst Leon Weidman pointed out that Ethereum is experiencing a “supply crunch.”
“When the exchange dropped to 10.2%, 39.3% of ETH was locked up in smart contracts,” Weidman explained in a July 16 X post, adding that most investors don't realize “how tight” the ETH supply side is.
Five Ethereum exchange-traded funds (ETF) will begin trading on the Chicago Board Options Exchange on July 23, “pending regulatory effectiveness,” CBOE announced on July 19.
Related: Ether May Surpass Bitcoin After Space ETF Launch – Caico
On May 23, the United States Securities and Exchange Commission (SEC) approved rule changes allowing the listing of multiple Spot Ether (ETH) ETFs.
The five Ethereum ETFs set to begin trading are 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEek Ethereum ETF and Franklin Ethereum ETF.
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