As the highly anticipated launch date of spot Ethereum ETFs approaches, Matt Hougan, Chief Investment Officer of crypto asset manager Bitwise, has stressed the potential for these ETF inflows to drive the Ethereum price to record highs.
In a recent client note, Hougan highlighted the significant impact that ETF flows could have on the Ethereum price, surpassing even the effects witnessed in the spot Bitcoin ETF market in the US.
Ethereum ETFs Poised To Surpass Bitcoin’s Impact?
Hougan confidently predicts that introducing spot Ethereum ETFs will lead to a surge in ETH’s value, possibly reaching all-time highs above $5,000. However, he cautions that the first few weeks after the ETF launch could be volatile, as funds could flow out of the existing $11 billion Grayscale Ethereum Trust (ETHE) after it is converted to an ETF.
This could be similar to the case of the Grayscale Bitcoin Trust (GBTC), which saw significant outflows of over $17 billion after the Bitcoin ETF market was approved in January, with the first inflows recorded 5 months later on May 3.
Still, Hougan expects the market to stabilize in the long term, pushing Ethereum to record prices by the end of the year after the initial outflows subside, drawing a comparison with Bitcoin in key metrics to understand this thesis.
Related Reading
For example, Bitcoin ETFs have purchased more than twice the amount of Bitcoin compared to what miners have produced over the same period, contributing to a 25% increase in Bitcoin’s price since the ETF launch and a 110% increase since the market began pricing in the launch in October 2023.
That said, Hougan believes the impact on Ethereum could be even more significant, and identifies three structural reasons why Ethereum’s ETF inflows could have a greater impact than Bitcoin’s.
Lower Inflation, Staking Advantage, And Scarcity
The first reason Bitwise’s CIO highlights is Ethereum’s lower short-term inflation rate. While Bitcoin’s inflation rate was 1.7% when Bitcoin ETFs launched, Ethereum’s inflation rate over the past year has been 0%.
The second reason lies in the difference between Bitcoin miners and Ethereum stakers. Due to the expenses associated with mining, Bitcoin miners generally sell much of the Bitcoin they acquire to cover operational costs.
In contrast, Ethereum relies on a proof-of-stake (PoS) system, where users stake ETH as collateral to process transactions accurately. ETH stakers, not burdened with high direct costs, are not compelled to sell the ETH they earn. Consequently, Hougan suggests that Ethereum’s daily forced selling pressure is lower than that of Bitcoin.
Related Reading
The third reason stems from the fact that a substantial portion of ETH is staked and, therefore, unavailable for sale. Currently, 28% of all ETH is staked, while 13% is locked in smart contracts, effectively removing it from the market.
This results in approximately 40% of all ETH being unavailable for immediate sale, creating a considerable scarcity and ultimately favoring a potential increase in price for the second largest cryptocurrency on the market, depending on the outflows and inflows recorded. Hougan concluded:
As I mentioned above, I expect the new Ethereum ETPs to be a success, gathering $15 billion in new assets over their first 18 months on the market… If the ETPs are as successful as I expect—and given the dynamics above—it’s hard to imagine ETH not challenging its old record.
ETH was trading at $3,460, up 1.5% in the past 24 hours and nearly 12% in the past seven days.
Featured image from DALL-E, chart from TradingView.com
As the highly anticipated launch date of spot Ethereum ETFs approaches, Matt Hougan, Chief Investment Officer of crypto asset manager Bitwise, has stressed the potential for these ETF inflows to drive the Ethereum price to record highs.
In a recent client note, Hougan highlighted the significant impact that ETF flows could have on the Ethereum price, surpassing even the effects witnessed in the spot Bitcoin ETF market in the US.
Ethereum ETFs Poised To Surpass Bitcoin’s Impact?
Hougan confidently predicts that introducing spot Ethereum ETFs will lead to a surge in ETH’s value, possibly reaching all-time highs above $5,000. However, he cautions that the first few weeks after the ETF launch could be volatile, as funds could flow out of the existing $11 billion Grayscale Ethereum Trust (ETHE) after it is converted to an ETF.
This could be similar to the case of the Grayscale Bitcoin Trust (GBTC), which saw significant outflows of over $17 billion after the Bitcoin ETF market was approved in January, with the first inflows recorded 5 months later on May 3.
Still, Hougan expects the market to stabilize in the long term, pushing Ethereum to record prices by the end of the year after the initial outflows subside, drawing a comparison with Bitcoin in key metrics to understand this thesis.
Related Reading
For example, Bitcoin ETFs have purchased more than twice the amount of Bitcoin compared to what miners have produced over the same period, contributing to a 25% increase in Bitcoin’s price since the ETF launch and a 110% increase since the market began pricing in the launch in October 2023.
That said, Hougan believes the impact on Ethereum could be even more significant, and identifies three structural reasons why Ethereum’s ETF inflows could have a greater impact than Bitcoin’s.
Lower Inflation, Staking Advantage, And Scarcity
The first reason Bitwise’s CIO highlights is Ethereum’s lower short-term inflation rate. While Bitcoin’s inflation rate was 1.7% when Bitcoin ETFs launched, Ethereum’s inflation rate over the past year has been 0%.
The second reason lies in the difference between Bitcoin miners and Ethereum stakers. Due to the expenses associated with mining, Bitcoin miners generally sell much of the Bitcoin they acquire to cover operational costs.
In contrast, Ethereum relies on a proof-of-stake (PoS) system, where users stake ETH as collateral to process transactions accurately. ETH stakers, not burdened with high direct costs, are not compelled to sell the ETH they earn. Consequently, Hougan suggests that Ethereum’s daily forced selling pressure is lower than that of Bitcoin.
Related Reading
The third reason stems from the fact that a substantial portion of ETH is staked and, therefore, unavailable for sale. Currently, 28% of all ETH is staked, while 13% is locked in smart contracts, effectively removing it from the market.
This results in approximately 40% of all ETH being unavailable for immediate sale, creating a considerable scarcity and ultimately favoring a potential increase in price for the second largest cryptocurrency on the market, depending on the outflows and inflows recorded. Hougan concluded:
As I mentioned above, I expect the new Ethereum ETPs to be a success, gathering $15 billion in new assets over their first 18 months on the market… If the ETPs are as successful as I expect—and given the dynamics above—it’s hard to imagine ETH not challenging its old record.
ETH was trading at $3,460, up 1.5% in the past 24 hours and nearly 12% in the past seven days.
Featured image from DALL-E, chart from TradingView.com
can i buy generic clomiphene price can i get clomiphene online can i order clomid for sale can i buy clomiphene pill can i get cheap clomid tablets order cheap clomid without dr prescription buy generic clomid no prescription
More peace pieces like this would urge the интернет better.
More peace pieces like this would make the web better.
purchase azithromycin for sale – purchase tindamax generic order flagyl 200mg without prescription
purchase rybelsus online cheap – rybelsus 14 mg cost periactin over the counter
order motilium sale – motilium 10mg pills oral flexeril
order inderal 20mg – buy inderal 20mg methotrexate us
zithromax 250mg cost – bystolic price generic bystolic 20mg
buy augmentin 625mg generic – atbioinfo buy ampicillin paypal
buy nexium generic – https://anexamate.com/ order esomeprazole 40mg pills
cost coumadin 5mg – https://coumamide.com/ losartan 25mg pill
buy meloxicam 7.5mg online cheap – https://moboxsin.com/ mobic 7.5mg pills
cost prednisone 10mg – corticosteroid prednisone 40mg us
ed pills online – https://fastedtotake.com/ buy ed meds
buy amoxil medication – https://combamoxi.com/ order amoxil online cheap
fluconazole buy online – forcan oral buy diflucan medication
where to buy cenforce without a prescription – https://cenforcers.com/# buy cenforce 50mg generic
cheap cialis 5mg – cialis no perscription overnight delivery tadalafil price insurance
does cialis make you harder – click do you need a prescription for cialis
zantac 150mg without prescription – buy zantac ranitidine 150mg oral
buy generic viagra new zealand – viagra for women sildenafil jelly 100 mg
More posts like this would make the online time more useful. https://gnolvade.com/
More posts like this would prosper the blogosphere more useful. https://buyfastonl.com/azithromycin.html
Thanks on putting this up. It’s well done. online