Predictions from Various Parties on the Short- to Medium-Term Price Impact of the Launch of Ethereum Spot ETFs

Jul 24, 2024

Editor: WuBlockchain

On July 22, the US SEC officially approved multiple ETF issuers’ S-1 applications, granting the approval for Ethereum spot ETFs to be listed and traded, with trading beginning at 9:30 AM Eastern Time on July 23.

According to Bloomberg ETF analyst Eric Balchunas, the Ethereum spot ETF group achieved a trading volume of $112 million within the first 15 minutes of trading. This is a significant volume compared to the average ETF issuance but only half of the first-day trading volume of the Bitcoin ETF group (excluding GBTC). Nonetheless, it still exceeded expectations. In the first 15 minutes, the Grayscale ETHE had a trading volume of $39.7 million, Bitwise ETHW had $25.5 million, BlackRock ETHA had $22.5 million, and Fidelity FETH had $15.2 million.

Major market maker Wintermute estimates that Ethereum ETFs could attract up to $4 billion in inflows from investors over the next year. This is lower than the $4.5 billion to $6.5 billion predicted by most analysts, which is already about 62% less than the $17 billion raised by Bitcoin ETFs since they started trading in the US six months ago. Wintermute does expect that these inflows will drive Ethereum prices up by 24% over the next 12 months.

Daniel Yan, founder of Kryptanium Capital and co-founder of Matrixport, tweeted about the ETH ETF: “I still maintain a contrarian view that ETH/BTC will actually go lower rather than higher in the coming weeks. Reasons include: people buying on rumors and selling on news; net flow might be negative.” He predicts that ETH/BTC will fall below 0.05 and stabilize between 0.0475 and 0.05.

US regulators rejected issuers’ requests to allow Ethereum ETFs to stake their holdings of crypto. Wintermute noted in its report: “Compared to direct holding, this loss reduces the competitiveness of ETH ETFs because investors can still benefit from staking.”

Will Cai, Head of Indexes at Kaiko, stated in a report: “Late last year, the US launched futures-based ETH ETFs, but the demand was not ideal. All eyes are now on the launch of spot ETFs, with high hopes for rapid asset accumulation. Regardless of the long-term trend, Ethereum prices are likely to be ‘sensitive’ to the inflow volume in the first few days of trading. Implied volatility indicates a lack of confidence in the launch of ETH ETFs.”

Citi Bank reported that the net inflow for Ethereum spot ETFs might be equivalent to 30%-35% of that for Bitcoin ETFs, which means potential net inflows of $4.7 billion to $5.4 billion over six months. However, due to the lack of staking and Bitcoin’s first-mover advantage, the fund flows might be insufficient.

Grayscale stated that if the Ethereum (spot) ETF is approved, nearly a quarter (25%) of potential (US) investors would be more interested in investing in Ethereum.

Bitwise Chief Investment Officer Matt Hougan said that the US spot Ethereum ETF could attract $15 billion in net inflows within the first 18 months after listing. He expects investors to allocate roughly according to the market cap of Bitcoin and Ethereum ETFs ($1.2 trillion and $405 billion, respectively), giving approximately 75% weight to spot Bitcoin ETFs and 25% weight to Ethereum ETFs. Currently, assets managed through spot Bitcoin ETFs exceed $50 billion, and Hougan expects this figure to reach at least $100 billion by the end of 2025.

Crypto analytics firm K33 Research predicts that the forthcoming spot ETH ETF in the US will see inflows of $3 billion to $4.8 billion in the first five months. Based on current prices, this would equate to 800,000 to 1.26 million ETH being accumulated in the ETF, roughly 0.7%-1.05% of the total token supply. K33 Research analyst Vetle Lunde stated that this supply absorption shock should lead to an increase in ETH prices. Additionally, K33 believes that the omission of staking will not negatively impact ETF inflows. Previously, JPMorgan predicted $3 billion in inflows for ETH ETFs this year and believed that the omission of staking would affect inflows.

According to a report by Bernstein, the total market for Bitcoin and Ethereum ETFs is expected to grow to $450 billion, indicating that over $100 billion will flow into crypto ETFs over the next two years. The brokerage previously forecasted a peak Bitcoin cycle price of $150,000 by 2025, with a year-end target of $90,000. The report also noted that Ethereum, as the first PoS token approved as a spot ETF, has a positive impact on other blockchain tokens, with Solana (SOL) likely benefiting.

Bernstein analysts Gautam Chhugani and Mahika Sapra estimated that the approval of a spot Ethereum ETF would drive Ethereum prices up by 75% to $6,600. They pointed out that the SEC’s approval of a similar Bitcoin product in January led to a 75% increase in Bitcoin prices in the following weeks, expecting a similar price trend for ETH. However, Kaiko analyst Adam McCarthy believes that demand for Hong Kong’s ETH ETF has been low and has experienced several days of net outflows. The absence of staking is also a significant factor and may further impact demand.

Standard Chartered analyst Geoffrey Kendrick stated that cryptocurrencies such as SOL and XRP might receive ETF approval by 2025. He believes that the approval of an ETH ETF indicates that ETH and similar cryptocurrencies will not be classified as securities. Furthermore, he expects the ETH ETF to attract $15 billion to $45 billion in inflows within the first 12 months. Kendrick also predicts that the ETF will push ETH to $8,000 by the end of 2024.

Former Head of Market Insights at Genesis Global Trading, researcher Noelle Acheson, mentioned that multiple indicators show institutional interest in Ethereum ETFs is significantly lower than in Bitcoin ETFs. Bloomberg Industry Research ETF analyst Eric Balchunas expects Ethereum ETFs to account for “10–15% of Bitcoin ETF assets.” Currently, ETH futures ETFs have only 4% of the assets of BTC futures ETFs. Regarding the spot Ethereum ETF itself, existing data suggests a lack of institutional interest.

On an earlier WuBlockchain podcast, lawyer Dong Bing stated, “When the Bitcoin ETF was approved, I believed that an Ethereum ETF would also be approved sooner or later. The approval of a spot ETF requires two important conditions: a mature futures market and stability between spot and futures prices. This is why the Ethereum spot ETF could be approved smoothly after the Bitcoin ETF. If Bitcoin can reach $100,000 in the future, then it is possible for Ethereum to reach $6,000-$8,000. This prediction is relatively conservative, and the actual situation will depend on macroeconomic trends. The likelihood of a Solana spot ETF being approved is small due to the lack of a futures ETF and insufficient decentralization.”

Bloomberg ETF analyst James Seyffart stated in an interview that the demand for a spot Ethereum ETF could reach 20% to 25% of the demand for a spot Bitcoin ETF. Seyffart pointed out that this prediction is based on the Ethereum market being about 30% the size of Bitcoin’s market. Limitations of the Ethereum ETF include the inability to stake and utilize on-chain functionalities. Bitwise Chief Investment Officer Matt Hougan predicts “huge demand” for a spot Ethereum ETF, driven by diversified investments and interest in high-growth technologies.

Cobo and F2pool co-founder Shenyu said that in the early stages of the ETH ETF listing, the main inflows will likely come from retail investors, accounting for 80–90% of total funds, with minimal participation from institutional users. After December, institutional investors may gradually enter the market.

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