Bitwise Chief Investment Officer (CIO) Matt Hougan has stated that the much-anticipated spot Ethereum Exchange Traded Funds (ETFs) expected to launch next week will push the price of the crypto asset beyond $5000.
This means that the spot Ethereum ETFs are expected to push Ethereum above its all-time high. Matt explained that institutional inflow into the Ethereum ETFs would have a larger impact on the asset than it did for Bitcoin when its ETFs were launched in January.
“ It may not happen immediately and price action may be choppy to start, due to money flowing out of the $11 billion Grayscale Ethereum Trust (ETHE), after it converts to an ETF,
Still, “by year-end, I’m confident the new highs will be in,” Hougan wrote, “and if flows are stronger than many market commentators expect, the price could be much higher still.” Matt Hougan wrote.
Matt compared the impact of the proposed spot Ethereum ETF launch on Ethereum to the impact a similar ETF launch had on Bitcoin.
He noted that Bitcoin has surged by about 25% since its ETF was launched in January and has even surged by a whopping 110% since the market started pricing in the potential of the ETF launch as early as October last year.
Matt in his Bitwise report argued that the impact of the Ethereum ETFs would be larger than the ETFs had on bitcoin because of two valid reasons.
Ethereum’s current inflation rate was 0% ahead of its launch, during the Bitcoin ETF launch its inflation rate was 1.7%. This means that in Ethereum’s case, there is significant demand meeting zero supply which is a plus.
Matt explained that he liked the inflation figures of Ethereum going into its Etf launch.
“Significant new demand meets 0% new supply? I like that math. And if activity on Ethereum ticks up, so does the amount of ETH being consumed. That’s another lever of organic demand working in investors’ favor,” stated Hougan
Secondly, unlike Bitcoin miners who are in the habit of selling their BTC assets, Ethereum stakers do not have to sell and 28% of Ethereum is already staked meaning they can’t be sold.
Matt Hougan earlier speculated that the Ethereum ETFs would generate $15 billion of net inflows in the 18 months of trading.
The United States Securities and Exchange Commission under Gary Gensler is expected to approve the S-1 forms submitted by spot Ethereum ETF issuers on Monday next week ahead of ETF launch on Tuesday.
What to know
- There are eight proposed Ethereum ETF issuers in the lineup for launch on Tuesday and they include Blackrock, VanEck, Grayscale, Bitwise, Ark 21 shares, Invesco Galaxy, Franklin Templeton, and Fidelity. They are all asset managers also involved in Bitcoin ETFs.
- A cryptocurrency exchange-traded fund (ETF) is a financial product that allows investors to gain exposure to the price movements of cryptocurrencies without actually owning the asset itself. As of today, Bitcoin is the only Asset with an ETF, and Ethereum is expected to join soon. There have also been talks about a Solana ETF.