Analyst predicts high growth for Ethereum ETFs amid surging demand in the upcoming week
Ethereum’s trading volume and inflows in Ethereum ETFs have shown resilience despite significant outflows from the Grayscale Ethereum Trust (ETHE), according to insights from Bloomberg analyst Eric Balchunas.
The recent surge in Ethereum (ETH) prices, rising by almost 5% on Friday, sparked discussions about whether the inflows into ETH ETFs were a result of outflows from ETHE.
The debut of Ethereum ETFs grabbed the spotlight in both the cryptocurrency and traditional markets this week, with the Bitwise Ethereum ETF (ETHW) banner displayed outside the New York Stock Exchange.
During the first week of their launch, Ethereum ETFs recorded a trading volume exceeding $800 million for four consecutive days. While they didn’t attract inflows comparable to the “New Nine Bitcoin ETFs,” they demonstrated robust inflows and trading volume, as highlighted by Bloomberg analyst Eric Balchunas.
There were speculations within the crypto community that the demand for Ethereum ETFs might not be genuine, with concerns that inflows were merely outflows from ETHE. Balchunas, however, dispelled this notion, suggesting that a significant portion of the inflows likely represented new demand, while attributing ETHE outflows to hedge funds.
Balchunas pointed out that the outflows from ETHE were primarily from hedge funds capitalizing on the ETHE discount, with no intention of holding ETH long-term. He emphasized the importance for ETH investors to focus on the broader investment case advocated by issuers like BlackRock and Fidelity, rather than being swayed by initial outflows.
Given the substantial outflows from ETHE, it is anticipated that their impact will diminish more rapidly compared to GBTC. Consequently, Ethereum’s price might reflect the demand from ETF investors sooner than Bitcoin’s. However, this scenario could also lead to more pronounced short-term price fluctuations for ETH post-ETF launch compared to Bitcoin.
On the technical front, Ethereum’s current trading price around $3,250, up nearly 5% for the day, has seen 24-hour liquidations totaling $52.18 million, with long and short liquidations accounting for $30.13 million and $21.87 million, respectively, according to Coinglass data.
The expiration of ETH options valued at $1.57 billion, with a Put/Call Ratio of 0.46, could potentially trigger heightened volatility over the weekend. Despite recent gains, the continuous outflows from ETHE may exert downward pressure on ETH prices. The future trajectory of ETH hinges on broader market sentiment, with a positive outlook potentially leading to an upward trend, while a bearish market could test support levels between $2,852 and $2,803.
Looking ahead, Ethereum’s Market Value to Realized Value (MVRV) Ratio rebounding from its 365-day moving average suggests a potential rally in the coming months. Historical data indicates that such a rebound often precedes price increases, signaling a possible uptrend for ETH in the foreseeable future.
