Is Ethereum ETF Approval “Sell The News” Event Like Bitcoin ETF?

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As a seasoned financial analyst with extensive experience in the crypto market, I have witnessed firsthand the profound impact that Bitcoin exchange-traded funds (ETFs) have had on the price of Bitcoin since their launch. Now, with the imminent arrival of Ethereum ETFs, I am confident that this trend will continue and potentially intensify for Ethereum.

The upcoming introduction of Ethereum exchange-traded funds (ETFs) is generating great buzz in the cryptocurrency community, bringing to mind the excitement and repercussions experienced with Bitcoin ETFs. As stated by Matt Hougan, Bitwise’s Chief Investment Officer (CIO), these Ethereum ETFs have the potential to significantly impact Ethereum’s (ETH) price. Furthermore, Hougan predicts that they may push Ethereum to set a new record-breaking high.

Ethereum ETF Launch Impact On Ether Price

As a crypto investor following Hougan’s analysis, I believe Ethereum’s post-launch period might bring some volatility during the initial weeks. Nevertheless, I share his optimistic long-term view. By the end of this year, I am convinced new highs will be reached for Ethereum. If the inflows into investment vehicles such as the Grayscale Ethereum Trust (ETHE) exceed expectations from market commentators, we could witness even higher prices.

The Securities and Exchange Commission (SEC) has given its green light to 19b-4 forms for eight Ethereum Spot ETF proposals. Notable financial giants, such as BlackRock, Bitwise, Fidelity, and VanEck, are among the applicants. This approval is a noteworthy milestone in the process of launching ETFs that could potentially draw sizable investments from institutional and retail investors.

Hougan makes an analogy between Bitcoin and the ETFs, pointing out that since the introduction of these funds, they have bought a larger quantity of Bitcoin than miners have produced in the same period. The massive influx of institutional investment has contributed significantly to Bitcoin’s price increase of around 40% following the ETFs’ launch and over 100% when markets started factoring in their approval in late 2023.

However, Hougan argues that the impact on Ethereum could be even more pronounced for several reasons unique to the Ethereum ecosystem. Unlike Bitcoin, Ethereum has maintained a near-zero short-term inflation rate over the past year. Hougan explains, “That meant we needed $16 billion of bitcoin buying per year just to tread water.”

A Sell The News Event?

Additionally, Ethereum functions under a proof-of-stake consensus mechanism, which means stakers don’t have the same necessity to sell recently acquired assets to cover expenses as Bitcoin miners do. This distinction could help reduce selling pressure on Ethereum, possibly enabling its price growth to surpass that of Bitcoin when prompted by ETF inflows.

As an analyst, I’ve observed that a significant chunk of Ethereum’s total supply is tied up in staking contracts and decentralized finance (DeFi) applications. Consequently, around 40% of Ethereum is currently not readily accessible for selling, according to Hougan’s estimation.

Moving forward, Hougan expects that the introduction of successful Ethereum Exchange-Traded Funds (ETFs) could result in substantial price increases for Ethereum. This potential surge could potentially surpass previous Ethereum price records. He asserts, “Given the anticipated inflows from successful Ethereum spot ETFs, it’s difficult to imagine Ethereum not attempting to break its old record prices.”

According to recent market figures, Ethereum’s price was at $3,486.93 as of the most current trading statistics, representing a rise of more than 2%. The market sentiment is positive due to anticipation surrounding the upcoming ETF launch on July 23. Notable investors such as TRON founder Justin Sun have been accumulating Ethereum in preparation for this event. While the ETF launch may not trigger significant selling pressure, some whales could seize the opportunity to sell once these funds begin trading.

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2024-07-17 17:21