The launch of spot Ethereum Exchange Traded Fund (ETF) is a milestone for the Ether enthusiasts. But understanding the effect of this event is key to protecting your capital. This article will identify key arguments on how ETH could react to the US Securities and Exchange Commission (SEC) approving the S-1 forms.
Understanding the impact of Ethereum ETF
Regardless of the underlying asset, the launch of an ETF has played a significant impact on the price discovery. Gold is a good example. Therefore, like Bitcoin, Ether prices are also going to witness a massive volatility spike after the launch of spot ETF.
Galaxy pushed a report last Thursday titled “Sizing the Market for the Ethereum ETF.” In it, Charles Yu, president and research of Galaxy extrapolates Bitcoin’s ETF data points and comes up with two broad conclusion:
- Ethereum ETF inflows are going to attract 0.2x to 0.5x that of Bitcoin’s, aka $600 million to $1.5 billion in the first five months.
- But unlike Bitcoin, he argues that Ethereum’s ecosystem and functionality is different, which could have a larger impact on Ether prices post-launch.
To read our quick breakdown of this report – Click here.
To read our breakout of this report – Click here.
Ether ETFs, sell the news event?
Andrew Kang, a well-known crypto entrepreneur and investor mentioned that “the expectations of crypto natives are overinflated and disconnected…”
Kang believes ETH will trade between $3,000 and $3,800 before the ETF launch, but stabilize 30% lower between $2,400 and $3,000 post-launch. He also added that he sees the downtrend continue for ETHBTC, with the ratio sliding down to the 0.035 to 0.06 range over the next year.
Kang is not all bearish, he warns that if Bitcoin rallies to $100,000 at the end of this year or early next, this thesis of his could come undone. The ripple effect of this uptrend could drag Ethereum and altcoins up with it.
To contrast this bearish outlook, StoneX analysts forecast a 40% rally two months after spot ETH ETF goes live. But the firm went on to conclude that in roughly two years Ether could trade between $2,142 and $12,621.
