Markets
Ether ETFs Are Coming. Wall Street Is Divided on Their Impact
- Spot ether ETFs could reportedly launch as early as July 22.
- Wall Street analysts are divided on the impact this will have on the ether.
- Most people are keeping an eye on the volume of inflows into new ETFs to determine the impact on the price of Ether.
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To stain ether Exchange-traded funds are on the horizon, and this historic debut should mark another major win for the cryptocurrency industry.
But what this might mean for the token itself is less clear.
Wall Street has released a series of predictions on how the world’s second-largest cryptocurrency will fare once ETFs are launched. According to Reuters, trading could starting from Tuesday 22nd July.
Even before the Securities and Exchange Commission approved the funds in May, optimism about their creation had fueled the rally.
Since March, Standard Chartered has predicted that ether will hit $8,000 by the end of the yearThe bank expects these funds to generate ether inflows of between $15 billion and $45 billion over a 12-month time frame.
With ether trading just under $3,500 on Friday, that indicates a rally of over 130%.
Bulls they have drawn their trust from how bitcoin has performed since the launch of its spot ETFs in January. With money flowing into these funds As of early 2024, the Apex token has risen by more than 73%, reaching an all-time high of $73,780 in March.
However, opinions are divided on whether this momentum will materialize for the ether.
Ether ETFs will likely receive only a fraction of Bitcoin’s inflows, JPMorgan noted, writing Nikolaos Panigirtzoglou in late May.
Citi made a similar prediction this month, anticipating that ETF inflows will account for 30%-35% of what Bitcoin has touched. That amounts to $4.7 billion to $5.4 billion over the next six months, the report said, cited by CoinDesk.
To support this, both banks outlined some of the same factors. They noted bitcoin’s first-mover advantage and pointed out that the ether token offers features that would not be available through ETFs, thus limiting demand.
For example, ETF investors will not have access to ether staking, a feature where the token is locked up in exchange for a return.
However, others find these forecasts too bearish. At the end of June, Steno Search Ether is expected to hit $6,500 this year on strong inflows:
“The market outlook for the upcoming Ethereum spot ETFs is overly pessimistic. We expect net inflows of $15-20 billion within the first year, as Ethereum has qualities that are attractive to Wall Street,” the firm said. “This should drive its value up significantly, not only in dollar terms but also relative to Bitcoin.”
Sources who spoke to Reuters He also 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 the price of inflowsIn other words, the token could still make significant gains without matching flows into bitcoin spot funds.
“Despite uncertainty over ETH ETF reception, capturing 10-20% of Bitcoin ETF flows could push ETH above 4,000, approaching its peak of 4,800,” QCP Capital has published on Telegram in mid-June.
Supply considerations are a key reason SynFutures CEO Rachel Lin has predicted ether could skyrocket $22,500 this cycleIn a May note, he noted that the ether supply has remained at 120 million since 2022, while the bitcoin hoard has continued to grow.
But regardless of the impact that net inflows and supply could have on the price of Ether in the coming months, the immediate impact of ETFs could disappoint investors, some say.
“Price movements will be limited in the early 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 look at it more broadly: it is only the second cryptocurrency that can be easily added to investors’ portfolios. In the first two months after the ETF launch, Ethereum’s relative weight could increase.”