The second largest cryptocurrency, Ethereum, has lagged behind Bitcoin and Solana in terms of price performance since the market started to heat up at the end of last year, leaving ETH players relatively unimpressed even amidst the possibility of being in the mid-stage of a bull market.
In the past few months, Ethereum holders have been watching other ecosystem users celebrate, while they are left alone holding a full position of ETH with tears in their eyes. But the upcoming listing of the Ethereum spot ETF might just turn the tide for them!
When can trading of Ethereum spot ETF begin? At the earliest, in early July, and at the latest, by the end of September. We might get the latest progress on the Ethereum spot ETF on 7/2, and adjustments required by the SEC for the institutions are expected to be minimal. Thus, approval for the listing might be received at any time.
According to the latest statements, Ethereum spot ETF is expected to complete all preparation processes and be approved for listing before the end of this “summer,” meaning that Ethereum spot ETF might be open for trading on the US stock market by September at the latest.
With the listing of Ethereum spot ETF, it is expected to provide a legal and regulated investment channel for Ethereum, allowing traditional financial institutions and investors to enter the market in a relatively safer way, potentially driving up the price of Ethereum. Furthermore, with the regulatory guarantee, the liquidity and transparency of the ETF will increase the market’s confidence and visibility for Ethereum, especially for Ethereum itself and DeFi on the chain, which can generate additional income through staking, possibly attracting more investors who are not satisfied with the traditional market.
As for the potential price of Ethereum after the listing of the Ethereum spot ETF, it is estimated that the inflow of funds in the first five months after listing will be between $3 billion and $4.8 billion, indicating a strong market demand. This speculation is based on the relative global market share of ETH AUM to BTC, which is 28%, and the comparison of CME’s ETH OI to BTC, which is currently at 23%. Comparing these weights with the cumulative inflow of spot BTC ETF at $13.8 billion, it is estimated that the net inflow of ETH will be between $3.1 billion and $4.8 billion.
Research shows that the newly launched ETF is expected to absorb 750,000 to 1,000,000 ETH, equivalent to 0.65-0.85% of the circulating supply of ETH. All these signs indicate that although Ethereum has not performed as well as Bitcoin since the beginning of this year, there is a chance that the trend in the second half of the year will outperform Bitcoin after the opening of the spot ETF trading.
In addition to the opening of spot ETF trading, there are other potential bullish factors for Ethereum in the future, such as the weakening of regulatory pressure and the strong performance of ETP inflows. The SEC ended its investigation into Ethereum in April. The Consensys blockchain technology company, which has been focusing on the development of applications and infrastructure in the Ethereum ecosystem, accused the SEC of trying to classify Ethereum (ETH) as a security and abusing regulatory power to suppress specific tokens. Consensys believes that Ethereum should be considered a commodity rather than a security, a position that is more in line with the US Commodity Futures Trading Commission (CFTC). Two months later, after the spot ETF of Ethereum was approved, Consensys sent a letter to the SEC to confirm whether the approval of the ETF was equivalent to positioning Ethereum as a commodity, which ultimately led the SEC to end its investigation into Ethereum, and also helped the prices of Ethereum series tokens to rebound.
While the overall market has been in a downturn recently, the flow of ETH and BTC investment tools presents a stark contrast. The optimistic expectations for the launch of the US Ethereum spot ETF have driven the net inflow of global ETH ETP to 16,911 ETH for four consecutive weeks. In contrast, BTC ETP had a net outflow of 12,523 BTC last week, which is the third largest outflow of the week so far. In the past four weeks, the net inflow of ETH ETP in other regions has been 86,472 ETH, equivalent to $3 billion. The flow of ETH ETP is similar to that of BTC ETP in November 2023 (before the US BTC ETF spot was approved), with a monthly net inflow of $1.25 billion.
In comparison, it once again shows that the inflow of the US Ethereum spot ETF is likely to reach about $10 billion in the most ideal scenario, approximately 25% of the scale of the flow of the US BTC spot ETF. So, the probability of Ethereum exceeding $5,000 after the listing is still very high. For those who have spot positions, enduring this challenging market will be worth it.
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