Bitwise’s Chief Investment Officer, Matt Hougan, believes Ethereum ETFs will strongly impact on ETH price of Ether more than Bitcoin ETFs did for Bitcoin, for three key reasons.
Although U.S. spot Ether ETFs may initially struggle, they could ultimately have a greater effect on Ether’s price than Bitcoin ETFs had on Bitcoin, according to Matt Hougan from Bitwise.
“The first few weeks could be choppy, as money may flow out of the $11 billion Grayscale Ethereum Trust (ETHE) after it converts to an ETP,” Hougan stated.
“By year-end, I’m confident the new highs will be in,” he added that we shouldn’t expect big results right away because there might be selling pressure, similar to what happened when spot Bitcoin ETFs started trading on January 11.
Three Reasons Ethereum ETFs Will strongly Impact on ETH Price
Hougan explained three main reasons why he thinks Ethereum ETFs will strongly impact on ETH price more: Ether’s inflation rate is almost zero because so many people use Ethereum-based applications, and only a small amount of ETH is created daily.
Hougan also pointed out that Bitcoin miners have to sell Bitcoin to cover their high costs, like expensive computer chips and lots of energy. On the other hand, people staking ETH don’t have such high costs.
Another reason is that about 28% of all ETH is currently staked and locked away, which means it’s not available on the market.
Hougan’s remarks come as excitement builds for the launch of the spot Ether ETF, expected to debut on July 23, according to Bloomberg ETF analyst Eric Balchunas.
Ether Could Hit $5,000 by Year’s End
Hougan predicts that the new product will boost Ether’s price to over $5,000 by the end of 2024, which is a 47% increase from its current price of $3,401, according to CoinMarketCap. He also mentioned that if more money flows in than expected, the price could go even higher.
“If flows are stronger than many market commentators expect, the price could be much higher still,” He stated that he agrees with the prediction made by a crypto trader named Daan Crypto Trades, who believes that the expected amount of money coming into Ether ETFs might be underestimated.
“My expectation is still a little more optimistic in terms of ETF flows than most,” Daan Crypto Trade wrote on X post.
Ether’s price is currently positioned above the 200-day Moving Average (MA) and is anticipated to see a breakout around the time of the ETF launch.
In contrast, pseudonymous crypto trader Kaleo holds a different view from Daan Crypto Trades, predicting a potential downward spiral in Ether’s price upon the ETF launch.
“Gonna be a contrarian here and say that I believe Ethereum actually dips a bit next week vs. BTC,” they added.
While Hougan is hopeful that Ethereum will surpass $5,000 by the end of the year, traders in futures markets are predicting a potential drop in its price soon.
If Ethereum rises by 10% to $3,750, it could lead to $1.31 billion in short positions being liquidated, based on CoinGlass data. Conversely, a 10% decline could wipe out $544.39 million in long positions.
