Ethereum
What to expect once approved?
A number of exchange-traded funds (ETFs) that will track the spot price of Ethereum (ETH), which were given the green light in May, are expected to become tradable in the first week of July. In a recent job On X, senior ETF analyst Eric Balchunas noted that spot Ethereum ETFs could go live as early as July 2. report According to Reuters, the U.S. Securities and Exchange Commission (SEC) could give approval before July 4.
As the market awaits the launch of these new funds, the leading altcoin is expected to react in a similar way to Bitcoin (BTC) when Bitcoin spot ETFs launched earlier this year.
Ethereum set to hit new highs: What analysts say
As with Bitcoin in January, when Ethereum spot ETFs launch, there will be substantial capital inflows into the coin.
In a recent analysisFinancial services provider Citi found that net inflows into spot Bitcoin ETFs exceeded $13 billion between January 4, when they launched, and May 20.
These inflows sent the price of BTC skyrocketing, reaching an all-time high of $73,750 on March 14. According to Citi, the leading crypto asset saw a 6% increase in value for every $1 billion in inflow.
The bank predicts that if investors apply similar market-cap-adjusted flows to Ethereum, inflows could be between $3.8 billion and $4.5 billion after the ETF launch. This could lead to a 23% to 28% increase in the price of ETH.
At its current price of $3,450, a 28% rise means ETH will trade at $4,417 by November. Interestingly, this price will still be below its all-time high of $4,891, recorded in November 2021.
Others believe that the launch of Ethereum spot ETF will push the price of the coin to $10,000 by the end of the year. Andrey Stoychev, head of prime brokerage at Nexo, said this in a recent article interview. According to him:
“ETH ETFs in the US and similar products in Asia could be the engine that helps the asset reach $10,000 by the end of 2024, catching up to Bitcoin’s post-ETF performance. »
Staking rewards are not “safe”
There is an ongoing debate as to whether the launch of Ethereum spot ETFs would impact the network’s staking activity. According to Matthew Sigel, head of digital assets at VanEck, staking yields would skyrocket once these funds go live and ETH moves from staking protocols to ETFs.
However, this could lead to greater security problems for Ethereum. Layer 1 (L1) security depends on validators staking their coins. Once they start withdrawing their coins to ETFs, there will be fewer validators on Ethereum, making it subject to attack.
At the time of writing, there are 1.02 million validators on the Ethereum network, with an effective balance of 32.95 million ETH.
Total effective balance of Ethereum. Source: Glass node
However, others believe that ETFs would not provide gains that would incentivize ETH investors to withdraw their coins. In a recent reportCCData Research said:
“Hypothetically, if you had opened a position of 1,000 ETH on January 1, 2023 with an ETF provider, instead of holding native Ether, which accumulates staking rewards, you would have missed out on gains by more of $200,000. »
At the time of writing, investors held 27.68% of the total circulating supply of 120.18 million ETH.
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