Matt Hougan, chief investment officer at cryptocurrency asset manager Bitwise, said: Ethereum Ethereum
+1.02%
Exchange-traded fund (ETF) inflows could have a greater impact on the launch of Ether than the equivalent product for Bitcoin.
In a note to clients on Tuesday, Hougan predicted that spot Ethereum ETF inflows would push ether prices to all-time highs above $5,000, but not immediately. He said he expected the first few weeks after the Ethereum ETF launch would be “volatile” for the second-largest cryptocurrency by market cap, as funds could potentially flow out of the $11 billion Grayscale Ethereum Trust (ETHE) after it is converted to spot ETFs.
“But I am confident that we will see a new high by the end of the year, and if the momentum is stronger than many market commentators expect, prices could go much higher,” Hougan said.
The Securities and Exchange Commission approved eight Form 19b-4s for a spot Ethereum ETF from Bitwise on May 23, along with BlackRock, Fidelity, VanEck, Ark Invest, Invesco, Franklin Templeton, and Grayscale. However, sources told The Block on Monday, before trading can begin, the issuer still needs to have a valid S-1 registration statement, which will likely be on July 23.
ETF Flows Impact Ether Compared to Bitcoin
Spot ETFs don’t change the fundamentals of underlying assets like ether, but they do bring a new source of demand, Hogan said.
From that place onwards Bitcoin 
Bitcoin
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ETF According to Hougan, a total of 263,965 BTC were purchased across all launched funds, including Bitwise’s BITB, which is more than double the 129,281 BTC produced by Bitcoin miners.
Hogan said Bitcoin is up about 40% since the ETF launched on Jan. 11, and is up more than 100% since the market began pricing in approval in October 2023, and he expects the impact on Ether to be even greater.
Bitwise CIO previously predicted that a spot Ethereum ETF would attract $15 billion in net inflows in its first 18 months, a slower pace than the Bitcoin ETF, which reached the net inflow milestone after just five months of trading.
However, Hogan said he expects the inflows into Ethereum ETFs to have a larger impact on prices for three related reasons.
According to Hougan, Ethereum’s short-term inflation rate has been effectively 0% for the past year, while Bitcoin was at 1.7% when the spot Bitcoin ETF launched. “That meant we needed $16 billion in annual Bitcoin purchases to get through the water,” Hougan argued.
Hougan said that while Bitcoin miners typically have to sell the new bitcoin they produce to cover extensive operating costs, Ethereum stakers do not, and the direct costs of securing the proof-of-stake protocol are much lower. “Even if Ethereum’s inflation rate exceeds 0%, I don’t expect stakers to exert significant selling pressure,” he added. “There are fewer forced sells on Ethereum per day than on Bitcoin.”
Finally, as Ether stakers lock up their assets to receive rewards, it has essentially “disappeared from the market,” Hougan said. According to The Block’s data dashboard, the amount of Ether currently staked relative to the supply is 27.5%.
An additional 13% is locked in DeFi smart contracts, and around 40% of ether is “not sellable to any degree or at all,” Hougan claimed.
He said that given these dynamics, given the level of inflows Bitwise CIO expects, if a spot Ethereum ETF is successful, “it’s hard to imagine Ethereum not challenging its existing records.”
According to The Block’s Ethereum price page, Ethereum is currently trading at $3,477, down about 29% from its all-time high of $4,875 reached in November 2021.
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