A recent report by Steno Research suggests that the cryptocurrency market might be underestimating the imminent impact of spot Ethereum (ETH) exchange-traded funds (ETFs) approval in the US. According to the report, these ETFs are predicted to draw substantial capital inflows, possibly ranging from $15 billion to $20 billion in their first year alone. Despite potential exits from the Grayscale Ethereum Trust (ETHE), senior analyst Mads Eberhardt anticipates that these robust net inflows will elevate ETH’s value in both dollar and Bitcoin (BTC) terms.
How High Could ETH Prices Go?
The report projects that, bolstered by the expected inflows into spot Ethereum ETFs and other favorable factors, ETH’s price could surge to at least $6,500 by the end of the year. This optimistic prediction follows the preliminary approval of ETF applications by the US Securities and Exchange Commission (SEC), with these financial products potentially hitting the market as soon as next week.
If the anticipated capital inflows materialize, Steno Research forecasts that the ETH/BTC ratio could climb to 0.065 later this year. The report emphasizes that compared to spot Bitcoin ETFs, spot Ethereum ETFs will exert a more pronounced effect on ETH due to smaller capital inflows, lower market value, and considerably weaker liquidity. This suggests that the inflows into spot Ethereum ETFs are more likely to exceed expectations than to fall short.
Why Are Others More Conservative?
In contrast, most research firms, experts, and analysts exhibit a more conservative stance on spot Ethereum ETFs compared to Steno Research. Galaxy Research anticipates spot Ethereum ETFs will garner $5 billion in net inflows within the first five months. Similarly, Bitwise Asset Management predicts $15 billion in net inflows over the first 18 months.
Nevertheless, Steno Research remains the most optimistic about the potential influence of spot Ethereum ETFs on the market.
Key Inferences for Investors
Based on the analysis, here are crucial takeaways for stakeholders:
- Spot Ethereum ETFs could attract capital inflows between $15 billion and $20 billion in the first year.
- ETH’s price might rise to at least $6,500 by the year’s end.
- The ETH/BTC ratio could increase to 0.065 if capital inflows meet expectations.
Overall, the forthcoming introduction of spot Ethereum ETFs represents a pivotal event for the cryptocurrency market. As institutional investors gain easier access to ETH through these ETFs, the resulting capital inflows could significantly drive up prices. This development is especially noteworthy as it underscores ETH’s growing allure on Wall Street and its potential to outperform other cryptocurrencies in the near term.
