Bitwise: Ethereum ETF will have a greater impact on ETH prices

Author: Ciaran Lyons, CoinTelegraph; Compiler: Baishui, Golden Finance

Bitwise Chief Investment Officer Matt Hougan said that the U.S. spot Ethereum exchange-traded fund will have a rough start, but the impact on the asset price may be greater than the impact of the Bitcoin ETF on BTC.

"The first few weeks may be volatile as funds may flow out after the $11 billion Grayscale Ethereum Trust (ETHE) is converted into an ETP," Hougan said.

He added:"By the end of the year, I believe it will be a new high."He reiterated that don't expect significant results "immediately" because the potential selling pressure is similar to the pressure faced when the Bitcoin ETF launched trading on January 11.

Three Reasons Why an Ethereum ETF Would Have a Bigger Impact

Hougan gave three main reasons why he believes an Ethereum ETF would have a bigger impact on the asset’s price: Given the widespread use of Ethereum applications, Ethereum’s inflation rate is effectively zero compared to the “small amounts of ETH” generated each day.

In addition, because Bitcoin is “expensive and requires high-end computer chips and a lot of energy,” Bitcoin miners are forced to sell Bitcoin to stay operational. In contrast, those who stake ETH have no “significant direct costs.”

Another reason is that about a third of all ETH (28%) is staked and locked up for a period of time. “Right now, 28% of ETH is staked, which means it’s effectively off the market,” he said.

Hougan’s comments come amid growing anticipation for a spot Ethereum ETF, which is expected to debut on July 23, said Eric Balchunas, ETF analyst at Bloomberg.

Ethereum Could Hit $5,000 by Year-End

Hougan predicts the product will take Ethereum’s price past $5,000 by the end of 2024, a 47% gain from its current price of $3,401, according to data from CoinMarketCap.

Ethereum prices have risen 10.31% over the past seven days. Source: CoinMarketCap

However, Hougan said that this forecast may be too conservative if inflows exceed market expectations.

“If inflows exceed what many market commentators expect, prices could be higher,” he declared, in line with the predictions of anonymous cryptocurrency trader Daan Crypto Trades, who also believes that potential inflows into the Ethereum ETF are underestimated.

“My expectations are still a bit more optimistic than most in terms of ETF flows,” Daan Crypto Trade wrote in a July 17 X post.

They further noted that Ethereum’s price is “residing” above its 200-day moving average (MA) and “will eventually break out around the time of the ETF launch.”

Source: Daan Crypto Trades

At the same time, anonymous cryptocurrency trader Kaleo's view is opposite to that of Daan Crypto Trades - he believes that after the launch of the Ethereum ETF, the price of Ethereum will spiral downward.

“I’m going to take a contrarian view here and say that I believe Ethereum will actually fall relative to BTC next week,” they added.

While Hougan is optimistic that Ethereum can reach $5,000 or even higher by the end of the year, futures traders are betting on a near-term drop in Ethereum prices.

A 10% increase in Ethereum prices to $3,750 would result in $1.31 billion in short liquidations, while a 10% drop would wipe out $544.39 in long positions, according to CoinGlass.