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19/07/24
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Bitwise Chief Says Impact of Spot ETH ETFs on ETH Price Will be Bigger
Several analysts have expressed their expectations for Ether (ETH) as participants within the crypto space continue to expect final approval of spot ETH exchange-traded funds (ETFs) in the U.S.
Bitwise Chief Investment Officer Matt Hougan said it will be difficult for spot ETH ETFs to cope when they are launched, but their influence on the price of ETH may eventually be bigger relative to what happened to BTC prices after U.S.-based spot BTC ETFs were launched in January.
“The first few weeks could be choppy, as money may flow out of the $11 billion Grayscale Ethereum Trust (ETHE) after it converts to an ETP… By year-end, I’m confident the new highs will be in,” said Hougan.
Hougan noted that he does not expect notable outcomes immediately after the ETH ETFs start trading due to possible selling pressure. One of the reasons for stating that the influence of the ETH ETFs is that ETH’s inflation rate effectively amounts to zero.
The second reason is that there are no remarkable direct costs associated with ETH staking as compared to BTC miners who are compelled to sell BTC to maintain operations because they are “expensive, requiring high-end computer chips and loads of energy.”
The third reason is that almost 28 percent of ETH is staked and locked away for a period, which means that it is not available on the market. He believes that the spot ETH ETFs will push the price of ETH past $5k by the end of this year
“If flows are stronger than many market commentators expect, the price could be much higher still,” said Hougan. There is a growing anticipation for the launch of the spot ETH ETFs, with Bloomberg ETF analyst Eric Balchunas noting that they are expected to launch on July 23.
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