The cryptocurrency market is filled with excitement and expectation as the possible introduction of U.S. spot Ethereum (ETH) ETFs approaches. Analysts forecast a potential launch in early July, sparking discussions on whether these ETFs can attract as much demand as the hugely successful spot Bitcoin (BTC) ETFs. With Ethereum’s price being closely examined, the important question is whether Ethereum ETF will cause prices to surpass $4K.
The Bitcoin ETF Benchmark
In order to understand the importance, let’s examine the performance of Bitcoin ETFs. Since January, BTC-related products have collected approximatly $14.5 billion in net flows and have grown their assets under management (AUM) to more than $50 billion, as reported by Farside Investors.
This significant interest and investment have established a high standard for future cryptocurrency ETFs, including those designed for Ethereum.
Skepticism Surrounding ETH ETFs
In spite of the excitement, there is a lot of doubt regarding the possible influence of Ethereum ETFs. Numerous analysts think that ETH ETFs could only attract a small portion of the demand that Bitcoin ETFs have seen.
Quinn Thompson, who started the crypto hedge fund Lekker Capital, pointed out that the market is underestimating the positive effects of the forthcoming ETH ETF.
Analysts at JPMorgan predict that ETH ETFs may see inflows of $1 billion to $3 billion in the latter half of 2024. ETF analyst Eric Balchunas from Bloomberg predicted that Ethereum ETFs could potentially secure 20% of the market share currently dominated by Bitcoin ETFs.
These forecasts rely on the current demand trends for ETH compared to BTC in the futures market.
Bullish Counterarguments
Contrary to the bearish outlook, several analysts remain optimistic about the potential demand for Ethereum ETFs. Vetle Lunde from K33 Research estimated that ETH ETF products could see $4 billion in net inflows within the first five months alone.
ETH All Net Cumulative Volume (Source: Deribit Insights on x.com)
Bitwise CIO Matt Hougan also expressed a bullish perspective, viewing the second half of 2024 as being filled with ‘tailwinds’ that could boost ETH demand.
A recent report from Deribit Insights further bolstered this optimistic view, highlighting increased mid-term optimism based on options data. QCP Capital analysts echoed this sentiment, suggesting that if ETH captures even 10-20% of Bitcoin ETF flows, it could propel the price above $4,000 and possibly towards its all-time high of $4,800.
Market Sentiment and Predictions
Although the outlook is positive, there has been less enthusiasm for Ethereum spot ETFs in the market compared to when Bitcoin ETFs were introduced earlier this year. Entrepreneur Andrew Kang highlighted that the effects of ETH ETFs are not as straightforward, predicting that Ethereum ETF investments will make up approximately 10% to 15% of Bitcoin ETF investments.
Kang predicts that ETH’s price may range from $3,000 to $3,800 prior to the ETF debut, but could possibly decrease to $2,400 to $3,000 after the launch, resulting in a substantial decline from its present worth.
Yet, there is a positive aspect. By any chance Bitcoins hit the $100,000 milestone by end of this year, or early 2025, it could also both ETH, alongside other altcoins.
Optimism in Institutional Interest
Despite the doubts, there are still optimistic signs on the way. Asset management giants such as BlackRock could utilize Ethereum to tokenize physical assets, thereby increasing the value of ETH.
Additionally, the SEC has finalized its inquiry into the Ethereum Foundation, potentially confirming ETH as a commodity instead of a security, thus increasing its attractiveness to institutional investors.
Current Price Action of Ethereum (ETH)
Currently, Ethereum is trading at $3,363.36, after dropping in value by 4.15% over the past day, and 5.37% in the past week. However, ETH is experiencing heightened trading activity, with an increase of over 80% in trading volume, over the past 24 hours.
Conclusion
The price direction of ETH will significantly be impacted by the launch of Ethereum ETFs. Although opinions are split on whether these ETFs will have the same level of demand as Bitcoin ETFs, there is still potential for a significant impact. In case the optimistic projects of Ethereum prove accurate, the price of the second largest coin may surpass $4k. Achieving this milestone will be very significant for cryptocurrency. As the date for the launches approaches, both analysts and investors will be watching closely, on the market response, and whether or not Ethereum can meet the high expectations set before it.
