Crypto analysis firm Kaiko emphasized that the Ether price will be "sensitive" to spot ETF inflows in the coming days, stating that investors' subdued demand for futures products may revive in late 2023.
âThe launch of futures-based ETH ETFs in the US late last year was met with very low demand, with all eyes on the launch of spot ETFs with high hopes for rapid asset accumulation,â said Will Cai, head of index at Kaiko, in a July 22 market report. "In exile," he said.
âWhile a full demand picture will not emerge for several months, ETH price may be sensitive to inflow numbers in the early days.â
On July 22, several spot Ether ETFs received final approval and will begin trading on July 23.
Cai said one of the most significant impacts on price is expected to come from "potential" outflows from Grayscale Ethereum Trust (ETHE). Similar to Grayscale Bitcoin Trust, ETHE is a fund that offers ETH investment to institutions. However, there is a six-month lock-in period on the shares.
Converting ETHE into a spot ETF will allow investors to trade more easily, meaning many investors who bought ETHE shares will likely want to cash out when trading begins on July 23.
"ETHE's discount to net asset value has closed in the past few weeks after growing between February and May as approval hopes faded," Cai said.
âThe narrowing discount indicates that investors purchased ETHE below par value and will sell those shares at the NAV [net asset value] price upon conversion to realize a profit.â
Will ETH ETFs deliver as expected?
While spot Bitcoin ETFs have significantly impacted the price upon launch, there is less confidence that Ether ETFs will be as popular.
Crypto market maker Wintermute wrote in a July 21 research report that it expects Ethereum ETFs to inflow between $3.2 billion and $4 billion in their first year of trading.
âIn our view, ETFs will likely see lower demand than expected, approaching $3.2 billion to $4 billion,â Wintermute wrote.
The company predicts that Bitcoin ETFs will attract approximately $32 billion in assets by the end of 2024, and estimates of total first-year inflows into ETH ETFs will equate to approximately 10 to 12 percent of spot Bitcoin ETF flows.
ASXN provided a more optimistic forecast in a July 22 X post, forecasting an average monthly inflow into ETH ETFs of between $800 million and $1.2 billion. AXN expects the price impact of ETHE exits to be less due to the weaker discount rate.
âWe are open to upside surprises as ETHE is trading close to the spot price ahead of listings,â AXN said.
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