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Ethereum (ETH) price may drop after the initial excitement of spot Ethereum exchange-traded funds (ETFs) debuting in the US. Experienced analyst Benjamin Cowen predicts that if Ethereum’s supply continues to increase, its price will return to pre-The Merge levels of September 2022.
Price May Revert to Pre-The Merge Levels
Cowen shared on July 19, “If ETH supply has increased by approximately 60,000 ETH monthly since April, the supply will return to pre-The Merge levels by December.” The deflationary nature of Ethereum post-Merge meant a reduction of about 455,000 ETH in supply by April 2024, but since then, the supply has increased by approximately 15,000 ETH.
The analyst notes that if the supply continues to increase at this rate, Ethereum’s current price may drop in the coming months. Additionally, if it behaves similarly to 2016, Cowen expects the ultimate collapse of the ETH/BTC trading pair to begin in September 2024. This situation could lead to spot ETFs losing interest compared to spot Bitcoin ETFs.
As known, five spot Ethereum ETFs are planned to start trading on the Chicago Board Options Exchange on July 23. The US Securities and Exchange Commission (SEC) approved the listing rules for spot Ethereum ETFs on May 23. The ETFs to be traded include 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.
Ethereum’s Supply on Exchanges Drops to 10.2%
Meanwhile, on-chain analyst Leon Waidmann highlighted the current supply crisis of Ethereum. In a post on July 16, he stated, “The ETH supply on cryptocurrency exchanges has dropped to 10.2%, and 39.3% of ETH is locked in smart contracts.”
Waidmann emphasized that many investors are unaware of how little circulating ETH supply there is, noting that this situation is extremely positive for the altcoin king.
