Ethereum ETFs Expected to Propel ETH to Record Highs, Says Bitwise

Ethereum (ETH) saw a nearly 2% increase on Tuesday, driven by optimistic forecasts from Bitwise Chief Investment Officer (CIO) Matt Hougan suggesting that ETH exchange-traded funds (ETFs) could propel the cryptocurrency to surpass $5,000, reaching a new all-time high. This sentiment was echoed by Citi Bank and trader Peter Brandt, aligning with Hougan’s projections.

Hougan anticipates that the introduction of ETH ETFs will significantly impact ETH’s price, potentially driving it even higher than the $5,000 mark. He emphasized the potential influence of ETF inflows on Ethereum, citing the distinct demand ETFs bring to commodities without altering their core attributes. Comparatively, Bitcoin (BTC) experienced a 110% surge following the news of potential Bitcoin ETF approvals by the SEC.

The comparison between Bitcoin’s 1.7% inflation rate and Ethereum’s near-zero inflation over the past year highlights the deflationary nature of ETH, largely due to the implementation of Ethereum Improvement Proposal 1559 (EIP-1559). Hougan expressed optimism about the organic demand dynamics of Ethereum, emphasizing the impact of reduced economic costs on ETH’s selling pressure, unlike Bitcoin miners who often sell portions of their holdings to cover expenses.

Moreover, Hougan pointed out the significant decrease in available ETH due to increased staking and its utilization in decentralized finance (DeFi) protocols, with over 40% of ETH already removed from circulation. These factors, combined with Hougan’s forecast of ETH ETFs attracting $15 billion within the initial 18 months post-launch, set the stage for Ethereum to achieve a new all-time high.

In a separate report, Citi projected that Ethereum ETFs could potentially attract 30%-35% of the flows witnessed by Bitcoin ETFs, translating to approximately $4.7 billion to $5.4 billion in net inflows. The Securities & Exchange Commission (SEC) is expected to approve ETH ETFs for trading next Tuesday, following indications from Bloomberg analyst Eric Balchunas and Reuters.

On the technical analysis front, Ethereum’s current trading price around $3,460, coupled with a 2% daily increase, indicates positive market sentiment. Notably, ETH observed over $45 million in liquidations within 24 hours, with shorts leading at $25.36 million. The rise in options open interest to $6.66 billion suggests potential upward movement in the market, with option traders anticipating higher ETH prices.

Trader and analyst Peter Brandt further added to the positive outlook, forecasting that ETH could reach a new all-time high of $5,627 after finding support around $2,800. Brandt’s analysis points to a potential rally in Ethereum’s price if it surpasses the $3,502 mark, which could trigger the liquidation of over $34.8 million worth of short positions.

In conclusion, the convergence of optimistic projections from industry experts and analysts sets a bullish tone for Ethereum’s future price performance, underpinned by the potential impact of ETH ETFs on market dynamics.