As the market anticipates the introduction of these new Ethereum ETFs, many expect a similar response to what Bitcoin experienced when its ETFs were introduced in January.
Ethereum could hit new highs
Like Bitcoin in January, the arrival of the Ethereum ETF could generate numerous capital movements towards the world’s second largest cryptocurrency.
In a recent analysis, Citi found that net flows into spot bitcoin ETFs totaled more than $13 billion between January 4, when they were launched, and May 20.
These moves drove the price of BTC higher, reaching an ATH of $73,750 on March 14th. Citi notes that the value of the world’s leading cryptocurrency increased by 6% for every billion dollars of incoming funds.
If similar flows are seen for Ethereum, the inflow could be between $3.8 billion and $4.5 billion. This would push the price of ETH 23-28% higher as a result.
At the current price of $3,450, a 28% increase would put ETH at around $4,417 by November. An amount that would be impressive, but still lower than Ethereum’s all-time high of $4,891 reached in November 2021.
Other predictions, much more positive, expect a price close to $10,000 after the approval of the Ethereum ETF. In a recent interview, for example, Andrey Stoychev, director of the brokerage company Nexo, said this. He stated:
“U.S. ETFs could catalyze the asset to $10,000 by the end of 2024, matching bitcoin’s post-ETF performance. »
To go further: here are the factors that can affect the price of Ethereum.
Bet rewards are not guaranteed
There is ongoing debate about the impact Ethereum ETFs could have on on-chain staking. Matthew Sigel, head of digital assets at VanEck, suggests that betting revenue could increase following these launches. That while ETH would migrate from staking protocols to ETFs.
However, this could result in increased security risks for Ethereum. Layer 1 security relies on validators staking their ETH tokens. If they start moving their assets into ETFs, the number of validators on Ethereum would decrease and the blockchain would be vulnerable to attacks.
Currently, the Ethereum network has 1.02 million validators with an effective balance of 32.95 million ETH placed at stake.
Despite everything, other specialists believe that these ETFs will not offer attractive enough returns to motivate stakers to withdraw their coins.
“Hypothetically, if you had invested 1,000 ETH on January 1, 2023 in an ETF, instead of holding native Ether that accumulates stake rewards, you would have lost over $200,000 in profits.”
To date, 27.68% of the total circulating supply of ETH has been used to secure the network.
Moral of the story:
Disclaimer
Disclaimer: In accordance with The Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased information, but market conditions may change without notice. Always do your own research and consult with an expert before making any financial decision.