$5.4 Billion Expected Inflows in Ethereum ETFs Predicted by Citi Analysts, ETH Projected to Hit New All-Time Highs in Six Months
Citi has forecasted a significant influx of funds and analysts are anticipating Ethereum to achieve a new all-time high. The unique supply dynamics of Ethereum and potential capital inflows may propel its price to $5,000 or higher by the end of the year. Despite analysts’ bullish sentiments, the Securities and Exchange Commission’s (SEC) stance on staking within Exchange-Traded Funds (ETFs) raises concerns. Additionally, while analysts remain optimistic, the futures market indicates a potential short-term decline in Ethereum’s price.
The introduction of spot Ethereum ETFs on US exchanges has garnered attention, with Citi predicting substantial capital inflows over the next six months. This development aligns with a CNBC report suggesting potential inflows of up to $5.4 billion for these ETFs in the upcoming half-year, showcasing a growing interest in regulated cryptocurrency investment options. This trend follows the earlier debut of spot Bitcoin ETFs, which attracted approximately $17 billion in inflows within a six-month period.
Analysts are speculating that Ethereum could surge to $5,000 in value this year as institutional investments begin to flow in. Presently, amidst the launch of spot Ethereum ETFs, ETH is trading around $3,450, reflecting a slight decrease of over 1% in the past 24 hours. Bitwise Chief Investment Officer, Matt Hougan, believes that US spot Ether ETFs could have a more profound impact on Ethereum’s price compared to the effect of Bitcoin ETFs on BTC. Hougan anticipates initial turbulence as funds transition out of the $11 billion Grayscale Ethereum Trust (ETHE) into an ETF format. Nevertheless, he remains confident that Ethereum will achieve new price peaks by the end of the year.
The emergence of spot Ethereum ETFs is expected to have a more significant impact on Ethereum’s price compared to Bitcoin for several structural reasons. Firstly, Ethereum’s short-term inflation rate is currently at 0%, contrasting with Bitcoin’s 1.7% rate during its ETF launches, resulting in high demand meeting limited supply. Secondly, Ethereum stakers do not need to sell their holdings, and with 28% of Ethereum staked, a substantial portion is effectively off the market. Lastly, it is projected that Ethereum spot ETFs will attract $15 billion in net inflows within their initial 18 months of trading.
While there is optimism surrounding Ethereum’s potential price surge to $5,000 and beyond by the end of the year, futures traders are indicating a near-term price decline for Ethereum. Furthermore, the SEC’s prohibition on including staked Ether in ETFs poses a regulatory challenge. Approvals for ETFs have historically been contingent on the futures trading jurisdictional aspect, a requirement that Ethereum and Bitcoin currently lack.
The debut of spot Ethereum ETFs signifies a significant milestone for the cryptocurrency market, with the potential for substantial capital inflows and price rallies on the horizon. However, navigating initial market volatility and regulatory hurdles will be crucial in realizing these optimistic projections.
