Bitcoin
What to expect after approval?
Several exchange-traded funds (ETFs) that will track the spot price of Ethereum (ETH), which were previously approved in May, are expected to become tradable in the first week of July. In a recent publish on X, senior ETF analyst Eric Balchunas noted that spot Ethereum ETFs could go live as early as July 2. report by Reuters, the U.S. Securities and Exchange Commission (SEC) may give your approval by July 4th.
While the market awaits the launch of these new funds, there is an expectation that the leading altcoin would react in the same way as Bitcoin (BTC) when spot Bitcoin ETFs were launched earlier in the year.
Ethereum Touches New Highs: What Analysts Are Saying
Just like Bitcoin in January, when spot Ethereum ETFs launch, there will be substantial capital inflows into the coin.
In a recent analysisfinancial services provider Citi found that net inflows into spot Bitcoin ETFs exceeded $13 billion between January 4, when they were launched, and May 20.
These inflows caused the price of BTC to soar, reaching an all-time high of $73,750 on March 14. According to Citi, the leading crypto asset saw a 6% increase in value per $1 billion inflow.
The bank projects that if investors apply similar market capitalization-adjusted flows to Ethereum, flows could range between $3.8 billion and $4.5 billion after the launch of the ETFs. This could cause the price of ETH to rise by 23 to 28%.
At its current price of $3,450, a 28% spike means ETH will trade at $4,417 in November. Interestingly, this will still be lower than its all-time high of $4,891, recorded in November 2021.
Others believe that the launch of spot Ethereum ETFs will drive the coin’s price to $10,000 by the end of the year. Andrey Stoychev, head of prime brokerage at Nexo, stated this in a recent interview. According to him:
“ETH ETFs in the US and similar products in Asia could be the engine that helps the asset reach $10,000 by the end of 2024, tracking Bitcoin’s post-ETF performance.”
Staking rewards are not “safe”
There is an ongoing debate over whether the launch of spot Ethereum ETFs would impact the network’s staking activity. According to Matthew Sigel, head of digital assets at VanEck, staking yields would increase when these funds go live and ETH moves from staking protocols to ETFs.
However, this may result in greater security problems for Ethereum. Layer 1 (L1) security depends on validators staking their coins. Once they start withdrawing their coins to put into ETFs, there will be fewer validators on Ethereum, making you prone to attacks.
At the time of writing, there are 1.02 million validators on the Ethereum network, with an effective balance of 32.95 million ETH.
Total Ethereum Effective Balance. Source: glass knot
However, others believe that ETFs would not bring gains that would lead ETH stakers to de-stake their coins. In a recent reportCCData Research said:
“Hypothetically, if you had opened a 1000 ETH position on January 1, 2023, with an ETF provider, instead of holding native Ether, which accrues staking rewards, you would have missed out on gains of over $200,000.”
At the time of writing, investors had staked 27.68% of the total circulating ETH supply of 120.18 million ETH.
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