Author: Ciaran Lyons, CoinTelegraph; Translated by: Baishui, Golden Finance
Bitwise Chief Investment Officer Matt Hougan said that the U.S. spot Ethereum exchange-traded fund will have a rough start, but the impact on the asset price may be greater than the impact of the Bitcoin ETF on BTC.
“The first few weeks may be volatile as funds may flow out after the $11 billion Grayscale Ethereum Trust (ETHE) is converted to an ETP,” Hougan said.
“By the end of the year, I believe we’ll be setting new highs,” he added, reiterating not to expect significant results “immediately” as the potential selling pressure is similar to that faced when the Bitcoin ETF launched trading on Jan. 11.
Three Reasons Why an Ethereum ETF Would Have a Bigger Impact
Hougan gave three main reasons why he believes an Ethereum ETF will have a greater impact on the asset’s price: Given the widespread use of Ethereum applications, Ethereum’s inflation rate is effectively zero compared to the “small amounts of ETH” generated every day.
Furthermore, because Bitcoin is “expensive, requires high-end computer chips and a lot of energy,” Bitcoin miners are forced to sell Bitcoin to maintain operations. In contrast, those who stake ETH have no “significant direct costs.”
Another reason is that about a third of all ETH (28%) is staked and locked for a period of time. “Right now, 28% of ETH is staked, which means it’s effectively off the market,” he said.
Hougan’s comments come amid growing anticipation for a spot Ethereum ETF, which is expected to debut on July 23, said Eric Balchunas, an ETF analyst at Bloomberg.
Ethereum price could reach $5,000 by year end
Hougan predicts the product will push Ethereum’s price above $5,000 by the end of 2024, a 47% increase from its current price of $3,401, according to CoinMarketCap.
Ethereum prices have risen 10.31% over the past seven days. Source: CoinMarketCap
However, Hougan said that forecast could be too conservative if inflows exceed market expectations.
“If inflows exceed what many market commentators expect, prices could be higher,” he declared, echoing the predictions of anonymous cryptocurrency trader Daan Crypto Trades, who also believes that potential inflows into an Ethereum ETF are underestimated.
“My expectations are still a bit more optimistic than most when it comes to ETF flows,” Daan Crypto Trade wrote in a July 17 X post.
They further noted that Ethereum’s price is “residing above” its 200-day moving average (MA), which “will eventually break out around the time of the ETF launch.”
Source: Daan Crypto Trades
Meanwhile, anonymous cryptocurrency trader Kaleo has the opposite view to Daan Crypto Trades - he believes that the price of Ethereum will spiral downward after the launch of the Ethereum ETF.
“I’m going to take a contrarian view here and say that I believe Ethereum will actually fall relative to BTC next week,” they added.
While Hougan is optimistic that Ethereum can reach $5,000 or even higher by the end of the year, futures traders are betting on a drop in Ethereum prices in the near term.
According to CoinGlass, a 10% increase in Ethereum prices to $3,750 would result in $1.31 billion in short liquidations, while a 10% drop would wipe out $544.39 in long positions.
