What’s Next for Ethereum After ETF Approval?

Author: The DeFi Investor;Compiler: TechFlow

Future Outlook for Ethereum

The spot Ethereum ETF is finally available.

Judging from the initial trading volume, the launch was quite successful.

However, as we can see, ETH began to fall after the launch.

In this article, I will discuss the reasons behind this, the future trend of ETH prices, and two important catalysts that Ethereum is about to usher in.

My expectations for ETH price trends

I think there are two main reasons why ETH is currently underperforming BTC:

The launch of the spot ETH ETF is a "sell news" event: This phenomenon also occurred in the short term after the launch of the spot BTC ETF.

Since the spot ETH ETF was approved a few months ago, everyone who wanted to buy ETH had plenty of time to do so. Therefore, catalysts known in advance tend to become "sell news" events.

The launch of the ETH ETF unlocked $9 billion of ETH in the Grayscale Ethereum Trust: these ETH were locked up for years, and now the holders can finally sell them, so many people are selling.

So how long will it take for this decline to end?

In the case of BTC, the spot BTC ETF bottomed out about two weeks after the launch. After that, the price went sideways for a few days and then hit a new all-time high.

If the demand for the spot Ethereum ETF is high in the coming weeks, ETH may also see a similar situation. But for this to happen, the net flow of the ETH ETF needs to turn positive.

For example, yesterday the ETH ETF saw an outflow of $133 million due to selling pressure from the Grayscale Ethereum Trust. There are also some reasonable concerns about ETH in the short term:

Catalysts Coming for Ethereum

I would also like to talk about two important catalysts coming for Ethereum.

The first is the approval of Ethereum ETF staking. This could significantly increase demand for spot Ethereum ETFs. While the annual ETH staking yield of about 3.2% does not seem like much, due to ETH's lower annual inflation rate and the fact that staking can earn returns, this may make ETH more attractive to some institutions than BTC.

According to the SEC commissioner, Ethereum ETF staking “can always be reconsidered,” so its approval is only a matter of time.

The second catalyst is the launch of Pectra, Ethereum’s next hard fork. This major upgrade is expected to take place in late Q4 of this year or Q1 of 2024. Pectra will introduce several major changes:

• Making Ethereum account addresses more programmable

• Increasing the maximum stake of ETH validators from 32 to 2048 ETH

By making Ethereum account addresses more programmable, Pectra will bring significant on-chain user experience improvements.

For example, it will support batch sending transactions, develop social recovery features for wallets, and allow dApps to pay users' gas fees. Such user experience upgrades are what cryptocurrencies need to achieve mass adoption.