Ether’s price is expected to rise by up to 24% by the end of 2024, according to recent estimates. This projection is influenced by anticipated weak demand for spot ETFs.
Impact of Spot ETFs on Ether
Crypto analytics firm Kaiko predicts that Ether’s price will be sensitive to the early inflows of spot ETFs. Kaiko’s head of indexes, Will Cai, noted that the market is cautious following the lackluster response to last year’s futures-based ETH ETFs in the U.S.
“The futures-based ETH ETFs were met with low demand,” Cai said in a July 22 report. “Attention now shifts to spot ETFs, with high hopes for quick asset accumulation.” Cai added that while a full demand picture may take months, Ether’s price could react quickly to initial spot ETF inflows.
New Spot Ether ETFs Begin Trading
Several spot Ether ETFs received approval on July 22 and start trading on July 23. Cai pointed out that a notable impact on Ether’s price might come from potential outflows from the Grayscale Ethereum Trust (ETHE). This trust, like the Grayscale Bitcoin Trust, offers institutional exposure to Ether but enforces a six-month lock-up period on shares.
With ETHE converting to a spot ETF, trading will become easier, leading many investors to potentially cash out. Cai noted that ETHE’s discount to net asset value (NAV) had narrowed recently, suggesting that traders might redeem their shares at NAV to realize profits.
Conflicting Predictions for Ethereum ETFs
Opinions on Ethereum ETFs vary. Wintermute, a crypto market maker, expects Ethereum ETFs to attract between $3.2 billion and $4 billion in their first year. They predict this will be significantly less than the $32 billion forecasted for Bitcoin ETFs by the end of 2024. Wintermute estimates that Ethereum ETFs might capture only 10% to 12% of Bitcoin ETF flows, with Ether’s price rising up to 24% by year-end.
In contrast, boutique crypto asset firm ASXN offered a more optimistic view. They forecast average monthly inflows of $800 million to $1.2 billion into ETH ETFs. ASXN also believes that ETHE outflows might have a smaller impact than feared, thanks to a dynamic discount premium to NAV and the introduction of Grayscale’s mini ETH ETF.
“We expect a potential upside surprise due to ETHE trading at par before launch and the new mini trust,” ASXN stated.
As spot Ether ETFs start trading, their effect on Ether’s price will be closely monitored. While some forecasts suggest modest gains, others are more optimistic. The coming months will reveal how these new ETFs influence Ether’s price and market sentiment.
