TLDR
- Spot Ethereum ETFs are expected to launch on July 23, 2024.
- Bitwise CIO Matt Hougan predicts Ethereum price could reach $5,000 by end of 2024.
- Ethereum ETFs may have a bigger impact on ETH price than Bitcoin ETFs did for BTC.
- Reasons for potential bigger impact include Ethereum’s near-zero inflation rate and staking dynamics.
- Initial weeks after launch may be volatile, but long-term outlook is bullish.
The crypto world is buzzing with anticipation as spot Ethereum exchange-traded funds (ETFs) are set to launch on July 23, 2024.
This development comes months after the successful launch of Bitcoin ETFs, which had a significant impact on the cryptocurrency market.
Matt Hougan, Chief Investment Officer at Bitwise, believes that Ethereum ETFs could have an even bigger effect on ETH’s price than Bitcoin ETFs did for BTC.
Hougan predicts that Ethereum’s price could reach $5,000 by the end of 2024, a 47% increase from its current price of around $3,400.
I –really– enjoyed this conversation. We explore both the bull and the bear case for Ethereum ETFs and how they could impact the market.
One of my favorite podcasts from the last few months. https://t.co/Dqn0ygvxp7
— Matt Hougan (@Matt_Hougan) July 16, 2024
However, Hougan warns that the initial weeks after the ETF launch might be volatile. He expects potential outflows from existing investment vehicles like the Grayscale Ethereum Trust (ETHE) as it converts to an ETF.
Despite this short-term turbulence, Hougan remains confident about Ethereum’s long-term prospects.
The Securities and Exchange Commission (SEC) has already approved 19b-4 forms for eight spot Ethereum ETFs. These include offerings from major financial institutions like BlackRock, Bitwise, Fidelity, and VanEck. This approval paves the way for increased institutional and retail investment in Ethereum.
Hougan points out several factors that could make Ethereum ETFs more impactful than their Bitcoin counterparts. First, Ethereum has maintained a near-zero short-term inflation rate over the past year. This means less new ETH is being created compared to the demand from ETF purchases.
Second, Ethereum operates on a proof-of-stake system, where those who stake ETH don’t face the same pressure to sell their holdings as Bitcoin miners do to cover operational costs. This could result in less selling pressure on Ethereum.
Lastly, a significant portion of Ethereum’s supply is locked in staking contracts or decentralized finance (DeFi) applications. Hougan estimates that about 40% of all ETH is “somewhat or completely unavailable for sale.” This reduced supply could amplify the impact of ETF-driven demand.
Not everyone shares Hougan’s optimistic outlook. Some traders, like the pseudonymous Kaleo, believe Ethereum’s price might dip in the short term following the ETF launch. This view aligns with the “sell the news” phenomenon often seen in financial markets.
$ETH Getting really compressed here after the initial move up due to the ETF news.
Sitting on top of the Daily 200MA/EMA. I suspect this will eventually break out surrounding the ETF launch.
My expectation is still a little more optimistic in terms of ETF flows than most. pic.twitter.com/iHwuUBKOhE
— Daan Crypto Trades (@DaanCrypto) July 17, 2024
The launch of Ethereum ETFs represents a significant milestone for the cryptocurrency. It opens up new avenues for traditional investors to gain exposure to Ethereum without directly holding the cryptocurrency.
This increased accessibility could lead to substantial inflows of capital into the Ethereum ecosystem.
As the launch date approaches, the crypto community watches with keen interest. While predictions vary, there’s a general consensus that Ethereum ETFs will have a notable impact on the market.
Whether this impact will be immediately positive or lead to short-term volatility remains to be seen.
Investors and enthusiasts alike are advised to keep a close eye on market movements in the coming weeks. The launch of Ethereum ETFs marks another step in the integration of cryptocurrencies into mainstream finance, potentially reshaping the landscape of digital asset investment.
