ETH-ETF Launch Boosts Market Sentiment

Following the confirmation of the start date for trading spot Ethereum-ETFs on the CBOE, digital gold held steady above $66,000. 

According to the exchange, the listing of the product from Franklin Templeton and four other instruments is scheduled for July 23. Previously, the SEC approved applications for the launch of mini-ETFs based on Ethereum from Grayscale and an exchange-traded fund from ProShares.

On the evening of July 19, the crypto market began to rise actively. Bitcoin tested the $67,000 level before correcting to $66,500. The asset rose by 4.5% over the day.

Ethereum was slightly weaker than the leading cryptocurrency. The coin gained 2.3% over 24 hours and is trading around $3,500 at the time of writing. 

Other top-10 assets by market capitalization also entered the “green zone.” XRP saw the largest increase of the day, rising by 8.2%. 

According to Coinglass, the volume of liquidations over the past day reached $149.3 million, with $96 million attributed to short positions. 

Risks for Ethereum

Despite the positive factor of exchange-traded funds, the second-largest cryptocurrency by market capitalization may face a supply crisis. 

According to analyst and Into The Cryptoverse founder Benjamin Cowen, Ethereum’s price risks declining if supply continues to grow at the current pace after the initial ETF excitement subsides.

If the supply of #ETH keeps increasing by ~60k/month like it has been since April, then by Dec the supply will be back to what it was at the merge.

Could be a narrative that people focus on later this year, when they should actually focus on monetary policy.

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— Benjamin Cowen (@intocryptoverse) July 19, 2024

He claims that the number of new coins is growing by approximately 60,000 ETH every 30 days over four months. The Merge hard fork reduced the total supply by 455,000 ETH by April, but the figure could return to previous levels by December, the expert warned. 

“If you ignore monetary policy because you think it doesn’t matter, you might consider 2016. The ETH/BTC pair had a false breakout below the lows in Q2 2016, then real capitulation in Q4. Could we see the same this year?” Cowen suggested. 

While the CEO of Into The Cryptoverse believes that by the end of 2025, the price of ETH will likely “be higher than it is now,” there is potential for a decline over the next “three to six months.”

On July 16, analyst Leon Waidmann warned that Ethereum is facing a “supply crisis.” 

?#Ethereum Supply Crisis Looming!?

Exchange balances down to 10.2% while 39.3% of #ETH is locked in smart contracts.

Most investors still don’t realize how tight the ETH supply side is and how big the effect of the ETF will be! pic.twitter.com/uED4DFx5C6

— Leon Waidmann | Onchain Insights? (@LeonWaidmann) July 16, 2024

“Exchange balances [in ETH] have fallen to 10.2%, while 39.3% of assets are locked in smart contracts. Most investors still don’t realize how tight the coin’s supply is and how significant the ETF’s effect will be,” he stated.

QCP Capital predicted that ether could rise to $4,800 following the approval of ETH-ETFs. Experts believe that demand amounting to 10-20% of the inflow into bitcoin funds will trigger a positive movement. 

In July, Binance CEO Richard Teng stated that the products will ensure a stable and significant capital inflow, but only over time.