Several exchange-traded funds (ETFs) tracking the Ethereum (ETH) spot price approved in May are expected to become available for trading in the first week of July. In a recent post on X, senior ETF analyst Eric Balchunas noted that a spot Ethereum ETF could launch as early as July 2nd. Another report from Reuters said the U.S. Securities and Exchange Commission (SEC) may give approval by July 4.
While the market awaits the launch of these new funds, we expect major altcoins to react in the same way Bitcoin (BTC) did when a spot Bitcoin ETF was launched earlier this year.
Ethereum Set to Hit New Highs: What Analysts Say
Just as Bitcoin launched in January, the launch of an Ethereum spot ETF would see significant capital inflows into the coin.
According to a recent analysis, financial services provider Citi found that net inflows into spot Bitcoin ETFs exceeded $13 billion between January 4, when they were launched, and May 20.
These inflows caused the price of BTC to surge, reaching an all-time high of $73,750 by March 14. According to Citi, leading cryptocurrency assets saw a 6% increase in value for every $1 billion of inflows.
The bank estimates that if investors apply similar market cap adjustment flows to Ethereum, inflows could be between $3.8 billion and $4.5 billion after the ETF launches. This could lead to a 23-28% increase in the price of ETH.
A 28% surge from its current price of $3,450 would see ETH trading at $4,417 by November. Interestingly, this would still be lower than the all-time high of $4,891 recorded in November 2021.
Others believe that the launch of a spot Ethereum ETF could push the coin’s price to $10,000 by the end of the year. Nexo’s head of prime brokerage Andrey Stoychev said in a recent interview. According to him:
“The ETH ETF in the U.S. and similar products in Asia could be the driving force that helps the asset reach $10,000 by the end of 2024, and match Bitcoin’s performance after the ETF.”
Staking Rewards Are “Unsafe”
There is ongoing debate over whether the launch of a spot Ethereum ETF will impact staking activity on the network. According to Matthew Siegel, head of digital assets at VanEck, staking yields will skyrocket once such a fund is launched and ETH moves from staking protocols to ETFs.
However, this could lead to a broader security issue for Ethereum. The security of Layer 1 (L1) depends on validators staking their coins. If people start withdrawing their coins to put them in ETFs, the number of validators on Ethereum will decrease, making it vulnerable to attacks.
As of this writing, there are 1.02 million validators on the Ethereum network, with a valid balance of 32.95 million ETH.
However, others believe that ETFs will not provide enough benefits to encourage ETH stakers to unstake their coins. In a recent report, CCData Research said:
“Hypothetically, if you had opened a 1000 ETH position through an ETF provider on January 1, 2023 instead of holding the native Ether that accrues staking rewards, you would have missed out on over $200,000 in profits.”
As of this writing, investors have invested 27.68% of ETH’s total circulating supply of 120.18 million ETH.
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