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Ethereum Spot ETFs Will Legitimize Cryptocurrencies, Leading to ETH Supply Crisis – Integral
Ethereum spot ETF launch could lead to supply crunch at launch, says crypto accounting software firm Integral 3 June.
The projection reflects sentiment around Bitcoin spot ETFs before their launch earlier this year. Since then, ETFs linked to the flagship cryptocurrency have seen record inflows, with the supply of BTC on centralized exchanges falling significantly in tandem.
Ethereum supply crisis
Integral predicts that ETF issuers will purchase and hold large amounts of ETH, thereby removing a portion of ETH from open markets and driving the price of the cryptocurrency higher.
The trend is probably already underway. Integral cited crypto entrepreneur Oliver Isaacs, who revealed that More than $3 billion worth of ETH has abandoned trades since the SEC approved ETH spot approvals on May 23, pushing ETH exchange reserves to a six-year low.
Integral said that separate staking trends will intensify the supply crunch and noted that approximately 25% of ETH supply is currently staked. ETF issuers will not engage in staking directly, but staking participants will benefit from the price increase, according to the company.
Additionally, Integral believes the approvals will increase institutional adoption of ETH and validate cryptocurrencies as a legitimate asset class. Furthermore, he said the approvals could trigger an “altcoin season” as demand for ETH flows into other cryptocurrencies.
Spot ETH ETFs are expected to launch in the coming weeks or months.
IBIT represents 25% of BlackRock’s flows
Many are waiting to see whether Ethereum will follow the trend set by Bitcoin after ETFs linked to the flagship cryptocurrency began trading in January.
Newborn Nine Bitcoin Spot ETFs have established Bitcoin as a viable investment option in the traditional financial sector, as evidenced by their stunning and continued growth. Black rock AND FidelityIn particular, IBIT and FBTC stand out, having recorded a series of record inflows in the history of ETFs.
The two funds now represent a significant share of the total ETFs flows for both asset managers.
Bloomberg ETF Analyst Eric Balchunas BlackRock said IBIT accounted for 26% of the company’s $65 billion in ETF inflows since the beginning of the year. Notably, BlackRock is the largest ETF issuer in the United States, with 429 exchange-traded funds under its belt.
Since its launch, IBIT has seen total inflows of $16.7 billion.
Meanwhile, Fidelity is competing FBTC the fund accounts for 56% of its total ETF flows of $15.8 billion this year. To date, FBTC has seen total inflows of $8.9 billion.
Fidelity has launched and manages 70 ETFs.
Balchunas data indicates that BlackRock and Fidelity are the second and fifth largest ETF issuers based on year-to-date flows. The two companies are ranked first and second if we consider exclusively the companies that have launched a spot ETF on Bitcoin.