Ethereum
Ether ETFs Are Coming. Wall Street Is Divided on Their Impact
- Spot Ether ETFs could launch as early as July 22, according to reports.
- Wall Street analysts are divided on what impact this will have on ether.
- Most people monitor the volume of inflows into new ETFs to determine the impact on the price of Ether.
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Place ether Exchange-traded funds are on the horizon, and this historic debut should mark another major victory for the crypto industry.
But what this might mean for the token itself is less clear.
Wall Street has released a series of forecasts for how the world’s second-largest cryptocurrency will fare once ETFs are launched. According to Reuters, the exchanges could will start on Tuesday, July 22.
Even before the Securities and Exchange Commission approved the funds in May, there was optimism about their creation.
Since March, Standard Chartered has been predicting that ether will reach $8,000 by the end of the yearThe bank expects these funds to generate Ether inflows worth $15 billion to $45 billion over a 12-month period.
With ether trading just under $3,500 on Friday, that indicates a surge of over 130%.
Bulls drew their confidence of how Bitcoin performed after the launch of its spot ETFs in January. money is flowing into these funds By early 2024, the Apex token has climbed more than 73%, reaching a record level of $73,780 in March.
However, opinions are divided as to whether this dynamic will materialize for ether.
Ether ETFs will likely see only a fraction of bitcoin’s inflows, JPMorgan noted, Nikolaos Panigirtzoglou wrote in late May.
Citi made a similar forecast this month, anticipating ETF inflows will account for 30% to 35% of what bitcoin has seen. That’s between $4.7 billion and $5.4 billion over the next six months, according to the report, cited by CoinDesk.
To support this claim, both banks highlighted some of the same factors. They highlighted bitcoin’s first-mover advantage and pointed out that the Ether token offers features that would not be accessible through ETFs, thus limiting demand.
For example, ETF investors will not be able to access Ether staking, a feature where the token is locked in exchange for a yield.
Others, however, believe that these forecasts are too pessimistic. At the end of June, Research on shorthand Ether expected to hit $6,500 this year on strong inflows:
“The market outlook for upcoming Ethereum spot ETFs is overly pessimistic. We expect a net inflow of $15 billion to $20 billion in the first year, as Ethereum has qualities that appeal to Wall Street,” the firm said. “This should drive its value significantly higher, not only in dollar terms, but also relative to Bitcoin.”
Sources who spoke to Reuters It has also been noted that Ether’s liquidity is much more limited than Bitcoin’s, partly due to yield restrictions.
According to Galaxy Digital, this makes the ether more sensitive to capital inflow pricesIn other words, the token could still make significant gains without matching the flows into Bitcoin spot funds.
“Despite the uncertainty surrounding the ETH ETF reception, capturing 10-20% of Bitcoin ETF flows could propel ETH above 4,000, approaching its peak of 4,800,” QCP Capital published on Telegram in mid-June.
Supply considerations are a big reason why SynFutures CEO Rachel Lin predicted ether could skyrocket $22,500 this cycleIn a May note, she noted that Ether’s supply has remained at 120 million since 2022, while Bitcoin’s treasury has continued to grow.
But whatever impact net inflows and supply might have on ether’s price in the coming months, the immediate impact of ETFs could disappoint investors, some say.
“Price movements will be limited in the first few days as there will be a slow rotation into ETFs from cryptocurrency exchanges instead of rapid inflows,” Alex Kuptsikevich, senior market analyst at FxPro, told Business Insider.
He added: “But looking at things more broadly, it is only the second cryptocurrency that can easily be added to investors’ portfolios. In the first two months after the ETF launch, Ethereum’s relative weighting could increase.”