The price of Ethereum (ETH-USD) has soared above $3,450 as the market eagerly anticipates the launch of U.S.-based spot exchange-traded funds (ETFs) set to begin trading today. This development comes amid speculation about how well ETH ETFs will perform compared to their Bitcoin counterparts. However, despite this promising uptick, concerns about ETF inflows and potential market pressures are still hanging around like a dark cloud.
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A Promising Start with Potential Hiccups
With the launch just around the corner, optimism is high. “Market participants are also closely monitoring Grayscale’s $9 billion ETH Trust, as there are concerns that Grayscale’s potential selling pressure could counteract the positive effects of the new inflows,” noted Vivien Wong, partner at HashKey Capital’s Liquid Funds, in a Tuesday email to CoinDesk. HashKey, which helped launch one of the Ethereum ETFs in Hong Kong, anticipates $3 billion in inflows during the first six months of trading in the U.S. Despite this, worries persist about whether these new funds will replicate the success of Bitcoin ETFs.
Concerns About ETH’s Supply and Inflation
One key issue under scrutiny is Ethereum’s inflation rate. Wong pointed out that “over the past month, the ETH supply increased by around approximately 60k ETH,” which could potentially reverse the deflationary trend seen since the network’s merge. This inflationary pressure could dampen Ether’s appeal if it turns ETH into an inflationary asset once again.
Ethereum’s Performance
Ethereum’s recent performance has been impressive, with a 1.32% gain in the past 5 days. Yet, the big question remains: Can ETH ETFs match or exceed the success of Bitcoin ETFs, which have attracted over $17 billion in net inflows since their launch? Danny Chong, co-founder of Tranchess, believes that while ETH ETFs had a slow start in Hong Kong, a larger investor base in the U.S. could boost their performance.
Citi and Gemini are optimistic, forecasting inflows of up to $5.4 billion and $5 billion, respectively, within the first half-year. JPMorgan’s estimates are more conservative, predicting $3 billion to $6 billion, depending on whether staking is included.
At the time of writing, ETH is sitting at $3,452.73.
As the market prepares for the launch of ETH ETFs, it’s clear that while the initial outlook is positive, there may be challenges ahead.
