Reports on the launch of ETH-ETF had a positive impact on the market
-- Bitcoin surpassed $66,000 and Ethereum reached $3500 after the announcement of the start date for spot ETH-ETF trading.
-- Despite the positive factors, the second most capitalized cryptocurrency is at risk of facing a supply crunch.
Digital gold has consolidated above $66,000 on the CBOE amid the approval of the start date for spot Ethereum-ETF trading.
According to the exchange, the product from Franklin Templeton is scheduled to be listed on July 23. Prior to that, the SEC approved applications to launch an Ethereum-based mini-ETF from Grayscale and an exchange-traded fund from ProShares.
On the evening of July 19, the crypto market began an active growth. Bitcoin tested the level of $67,000, but then corrected to $66,500. The asset grew by 4.5% over the day.
Ethereum was a little weaker than the first cryptocurrency. The coin added 2.3% in 24 hours and is trading around $3500 at the time of writing.
Other assets from the top 10 by capitalization also entered the “green zone”. XRP grew the strongest during the day, increasing by 8.2%.
According to Coinglass, the volume of liquidations over the past day reached $149.3 million. $96 million of them came from short positions.
Risks for Ethereum
Despite the positive factor in the form of exchange-traded funds, the second most capitalized cryptocurrency may face a supply crisis.
According to Benjamin Cowan, analyst and founder of Into The Cryptoverse, the price of Ethereum risks falling if supply continues to grow at the current rate after the initial hype around ETFs subsided.
He claims that the number of new coins has been growing by around 60,000 ETH every 30 days for four months. The Merge hardfork reduced total supply by 455,000 ETH by April, but the figure could return to previous values as early as December, the expert warned.
“If you ignore monetary policy because you think it doesn't play a role, you might consider 2016. The ETH/BTC pair had a false exit below the lows in the second quarter of 2016, then a real capitulation in the fourth quarter. Perhaps we'll see the same thing this year?” suggested Cowen.
While the CEO of Into The Cryptoverse believes the price of ETH is likely to be “higher than the current price” by the end of 2025, there is potential for a decline over the next “three to six months.”
On July 16, analyst Leon Weidmann warned that Ethereum is facing a “supply crisis.”
“The balance of exchanges [in ETH] has dropped to 10.2%, while 39.3% of assets are locked in smart contracts. Most investors still don't realize how limited the supply of the coin is and how big the effect of ETFs will be,” he said.
Recall, QCP Capital predicted the growth of ether to $4800 after the approval of the ETH-ETF. Experts believe that demand in the amount of 10-20% of inflows into bitcoin funds will trigger a positive movement.
In July, Binance CEO Richard Teng said that the products will provide stable and significant capital inflows, but only over time.