While notable developments in the cryptocurrency market are making headlines, the only topic that remains in the spotlight is Ethereum ETF funds. According to Bitwise Chief Investment Officer Matt Hougan, US spot Ethereum investment funds will have a challenging start but could have a greater impact on the asset’s price than Bitcoin ETF funds did for Bitcoin.
Expert’s Commentary on Ethereum ETF
Hougan stated that the first few weeks could be volatile as funds might flow after the $11 billion Grayscale Ethereum Trust (ETHE) converts to an ETP, and he is confident that new peaks will be reached by the end of the year. He also reiterated that, considering the potential selling pressure similar to what Bitcoin ETF funds faced during their January 11 trading launch, immediate significant results should not be expected.
Hougan listed three main reasons why he believes Ethereum ETF funds will have a greater impact on the asset’s price: Given the widespread use of Ethereum-based applications, Ethereum’s inflation rate is effectively zero compared to the small amount of Ethereum created daily.
Additionally, Bitcoin miners are forced to sell Bitcoin to sustain their operations due to the high costs, high-end computer chips, and significant energy requirements. In contrast, Ethereum stakers do not have significant direct costs. According to Bloomberg ETF analyst Eric Balchunas, Hougan’s comments came at a time when expectations for the spot Ethereum ETF fund launch, expected on July 23, were rising.
Important Details About Ethereum
Hougan predicts that, according to CoinMarketCap data, the product will push Ethereum’s price above $5,000 by the end of 2024, representing a 47% increase from its current price of $3.401. However, Hougan believes that if inflows exceed market expectations, the prediction could be low.
Reflecting the prediction of crypto investor Daan Crypto Trades, who believes the potential inflow amount to Ethereum ETF funds is underestimated, he explained that if the flows are stronger than many market commentators expect, the price could be much higher. Daan Crypto Trade commented in a post dated July 17:
“My expectation is still a bit more optimistic than most in terms of ETF flows.”
He also noted that Ethereum’s price is at the peak of the 200-day Moving Average (MA) and will eventually break out after the ETF launch.
Hougan remains optimistic that Ethereum will reach $5,000 and above by the end of the year, although futures traders predict a short-term decline in Ethereum’s price. According to CoinGlass data, a 10% increase towards $3,750 would erase $1.31 billion in short positions, while a 10% downward move would wipe out $544.39 in long positions.
