Bitwise Predicts Ethereum Surge Beyond $5000 Following ETF Launch

The introduction of exchange-traded funds (ETFs) based on Ethereum’s spot price is expected to propel the cryptocurrency’s value to historic highs above $5000, according to a report by CoinDesk, citing Bitwise.

Matt Hougan, the company’s Chief Investment Officer, noted that initial price movements might be volatile due to fund outflows from the Grayscale Ethereum Trust. The assets in this ETF-convertible structure amount to $11 billion.

“Nevertheless, I am confident that by the end of the year, there will be new highs, and if the inflows are stronger than many market commentators expect, the price will be even higher,” Hougan wrote.

Bitwise experts highlighted that Bitcoin’s price has increased by approximately 25% since the launch of spot ETFs in January. Taking October 2023 prices as a starting point, when expectations of these products began influencing the market, the growth exceeds 110%.

According to analysts, inflows into exchange-traded funds will have a greater impact on Ethereum compared to the first cryptocurrency due to three structural differences:

• short-term zero inflation of ETH versus 17% for BTC (in January) creates increased demand in the absence of new supply;
• Ethereum validators do not need to sell coins to maintain operations, unlike Bitcoin miners;
• 28% of circulating ETH is locked in staking and, therefore, absent from the market.

Bitwise specialists expect spot ETH-ETFs to attract up to $15 billion in the first 18 months.

Analysts at Steno Research offered a similar forecast regarding fund inflows, estimating that Ethereum’s price will reach “at least $6500.”

Bernstein suggested reduced demand for Ethereum funds compared to similar Bitcoin products due to the lack of staking opportunities.

What’s Happening with the Ethereum-ETF Launch?

In May, the U.S. Securities and Exchange Commission (SEC) approved the 19b-4 forms of potential spot ETH-ETF issuers. Among the approved companies are VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK Invest/21Shares, Invesco/Galaxy, and Bitwise.

For product listing, S-1 applications must be registered with the regulator, so potential issuers are actively continuing their dialogue with the SEC.

Experts anticipated the launch of exchange-traded Ethereum funds in early July. However, during Senate hearings, SEC Chairman Gary Gensler cautiously predicted final product approval “sometime by the end of this summer.”

Following another round of S-1 form adjustments by issuers in early July, Nate Geraci, President of The ETF Store, named the 15th as the date for a positive SEC decision. Bitwise’s Head of Compliance, Katherine Dowling, confirmed that the process was “in the final stretch.”

However, on July 15, Bloomberg’s senior exchange analyst Eric Balchunas reported that spot ETH-ETF trading would commence on July 23, noting this would occur barring any “last-minute unforeseen issues.” Sources within the fund issuers confirmed his information.

On July 17, James Seyffart noted that companies began submitting final application forms, including fee amounts, as his colleague Balchunas had predicted. 21Shares was the first, with fees set at 0.21%.

First in the wave of #Ethereum ETF filings that we are expecting today just came in from @21Shares. They’re matching their #bitcoin ETF fee of 0.21% pic.twitter.com/moscBlxytz

— James Seyffart (@JSeyff) July 17, 2024

Michael van de Poppe, analyst and founder of MN Trading, identified the launch of ETH-ETF as one of the catalysts for the asset’s leading price growth in the ongoing bull market cycle.