Ethereum Price Expected to Soar with Launch of Spot ETFs

The highly anticipated launch of spot ether (ETH) exchange-traded funds (ETFs) in the U.S. is set to take place next week, a move that is predicted to drive the price of the second largest cryptocurrency to record highs surpassing $5,000, as forecasted by Bitwise.

Although the surge may not be immediate and initial price fluctuations could be volatile, especially with funds moving out of the $11 billion Grayscale Ethereum Trust (ETHE) upon its conversion to an ETF, Matt Hougan, the chief investment officer, remains optimistic. In a report published on Tuesday, Hougan mentioned, “By year-end, I’m confident the new highs will be in,” and hinted at the potential for even higher prices if the market sees stronger-than-expected flows.

Bitwise highlighted that bitcoin (BTC) experienced a 25% increase since the introduction of spot ETFs in the U.S. back in January, with a remarkable 110% surge since the market began anticipating a possible launch in October last year. The impact of capital inflows into the new ether spot ETFs is expected to be more significant than it was for bitcoin, owing to three key structural reasons identified by Bitwise.

• Ethereum’s short-term inflation rate stands at 0%, presenting a scenario where high demand meets limited supply.
• Unlike bitcoin, ETH stakers are not required to sell, as 28% of ETH is staked and thus held off the market.
• The report suggests that ether spot ETFs will likely attract substantial interest, potentially drawing $15 billion in net inflows within the first 18 months of trading.

Another research firm, Steno Research, echoed a similarly bullish sentiment in a report from last month, forecasting that the price of ether could reach a minimum of $6,500 by the end of the year. This projection is based on the expected inflows into spot ETFs for ether, coupled with additional positive market factors.