According to Cointelegraph: The price of Ethereum (ETH) is expected to be highly sensitive to the inflows from newly approved spot ETFs in the coming days, according to crypto analytics firm Kaiko. This follows the underwhelming demand for futures-based ETH ETFs launched in late 2023.

Source: Julian Fahrer

Key Insights from Kaiko

  • Market Sentiment: Kaiko’s head of indexes, Will Cai, notes that while the full demand picture for these ETFs may take months to emerge, the price of ETH could react quickly to early inflow numbers.

  • Investor Attention: The market is closely watching the launch of the spot ETH ETFs, set to start trading on July 23, with high hopes for significant asset accumulation.

  • Impact of Grayscale Ethereum Trust: Cai highlighted potential outflows from the Grayscale Ethereum Trust (ETHE), which could affect ETH prices. ETHE has seen a narrowing discount to its net asset value, suggesting traders are positioning to redeem shares at net asset value upon conversion.

Market Predictions

  • Wintermute’s Outlook: Crypto market maker Wintermute predicts Ethereum ETFs will attract between $3.2 billion and $4 billion in inflows during their first year. This is a modest expectation compared to Bitcoin ETFs, which they anticipate will draw approximately $32 billion in the same period.

  • ASXN’s Bullish View: Boutique crypto asset firm ASXN forecasts an average monthly inflow of $800 million to $1.2 billion into ETH ETFs. They believe the impact of ETHE outflows will be less dramatic due to the recent tightening in the discount to net asset value and the launch of Grayscale’s mini ETH ETF.

Historical Context and Future Projections

  • Previous ETF Launches: The launch of futures-based ETH ETFs last year saw lackluster demand, raising concerns about the initial uptake of the new spot ETFs.

  • Price Sensitivity: According to Kaiko, while the long-term demand may take time to manifest, ETH’s price could be very responsive to early ETF inflows, reflecting market sentiment and investor behaviour.

Implications for Ethereum Investors

  • Short-term Volatility: Investors should brace for potential short-term volatility in ETH prices as the market digests the inflows from the new spot ETFs.

  • Long-term Growth: Despite mixed short-term expectations, the general outlook for Ethereum remains positive, with significant inflows projected to bolster its price by the end of 2024.

As the market anticipates these developments, Ethereum’s performance in the near term will provide critical insights into the broader acceptance and impact of spot cryptocurrency ETFs.

#ETF #ETH