Ethereum
Ethereum’s ETH price poised for rebound as ETFs could attract $4 billion in inflows in five months, says K33 Research
Ethereum-based exchange-traded funds (ETFs) that can directly hold ether (ETH) are coming to the United States soon and could attract $4 billion in inflows in the first five months, crypto analytics firm K33 Research said in a statement. report.
The company based its forecast by comparing assets under management in existing ETH-based exchange-traded products worldwide to similar bitcoins. (BTC) products and the amount of open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), the go-to market for institutional investors.
Ether’s OI on CME currently stands at 23% of the size of BTC futures, but it has seen an average 35% share of BTC futures from ETH futures. started trading on CME in 2021, indicating significant institutional demand for ETH in the United States, according to K33.
Applying these ratios to the nearly $14 billion inflows so far into spot BTC ETFs, K33 estimates ETH ETF inflows of between $3 billion and $4.8 billion over the first five months. This estimate is slightly higher than JPMorgan’s $3 billion forecast for this year.
Based on current prices, this would equate to 800,000 to 1.26 million ETH accumulated in ETFs, or approximately 0.7 to 1.05% of the total token supply, creating a supply crisis for the asset, according to the report. Unlike futures-based products, spot ETF issuers will need to purchase tokens in the spot market as investors purchase ETF shares.
“As seen for BTC, this monumental supply absorption shock should lead to ETH price appreciation,” said Vetle Lunde, principal analyst at K33 Research.
Bitcoin, after an initial correction at the end of January, rose by almost 60% to reach record levels following the introduction of spot ETFs in the United States. Analysts at K33 predicted that with the launch of Ether ETFs, the price of ETH would begin to outperform BTC after almost two and a half years of the ETH-BTC pair trending downward.
Last month, the U.S. Securities and Exchange Commission (SEC) approved key filings for spot ETH ETFs, a move that surprised most market participants. This decision paved the way for funds to be authorized to trade in the United States. After reviewing the necessary documentation, market observers expect the ETFs to begin trading as early as late June or early July, the K33 report said.
The applicants notably deleted the parts of their documents which would have allowed the assets to be placed in the fund, probably to appease the regulator.
K33 said omitting staking would not negatively impact flows into ETFs, contradicting JPMorgan’s position, since 99% of assets under management in Canadian ETH ETFs and 98% of European products are held in funds without staking.