TLDR
- Ethereum (ETH) spot ETFs are expected to attract significant inflows, potentially reaching $4 billion within the first five months of trading.
- Analysts predict that ETH might outperform Bitcoin (BTC) in the second half of this market cycle due to various factors, including lower operating costs for validators, token incentives, and a token burn mechanism.
- Nearly 40% of ETH is “soft locked” in DeFi services or as collateral, reducing its circulating supply and potentially increasing its value.
- If ETH surpasses the $4,000 mark, some analysts believe it could rally to $10,000.
- The omission of staking in the approved ETH ETFs is not expected to negatively impact inflows, as most assets in Canadian and European ETH ETFs are held in non-staked funds.
The recent approval of Ethereum (ETH) spot exchange-traded funds (ETFs) in the United States has sparked a wave of optimism among crypto enthusiasts and investors.
These ETFs, which can directly hold ETH, are expected to attract significant inflows, with some estimates suggesting they could reach $4 billion within the first five months of trading.
Crypto analytics firm K33 Research has based its forecast on a comparison between the assets under management in existing ETH-based exchange-traded products worldwide and similar Bitcoin (BTC) products.
The firm also considered the amount of open interest in futures contracts on the Chicago Mercantile Exchange, a key indicator of institutional demand.
As the ETH ETFs prepare to launch, many analysts predict that Ethereum might outperform Bitcoin in the second half of this market cycle.
This optimism stems from several factors, including lower operating costs for ETH validators compared to BTC miners, token incentives that result in less potential selling pressure, and a token burn mechanism introduced with the implementation of EIP-1559.
Another factor contributing to the bullish sentiment around ETH is the significant amount of the token that is “soft locked” in DeFi services or used as collateral. Nearly 40% of ETH is locked up in this manner, effectively reducing its circulating supply and potentially driving up its value.
Some analysts, like Jelle from CryptoJelleNL, suggest that if ETH can surpass the $4,000 mark, it could potentially rally to $10,000. This prediction is based on the recent breakout from a multi-month falling wedge pattern and the successful reclaiming of key support levels.
$ETH had spot ETFs approved, broke out of the falling wedge, reclaimed key support & now consolidates above that level.
Seeing lots of people overcomplicate things here. So long as prices hold above this area, theres no reason to flip bearish.
Hold on tight and enjoy the ride. pic.twitter.com/Gvn0MhnKsV
— Jelle (@CryptoJelleNL) June 4, 2024
The approved ETH ETFs will not include staking rewards, a decision likely made to appease regulators. While some have argued that this omission might lead to lower demand, K33 Research disagrees, pointing out that most assets in Canadian and European ETH ETFs are held in non-staked funds.
