Ethereum Could Surpass $5,000 with Spot ETF Launch: Bitwise Executive Predicts
Ethereum Spot ETF
Matt Hougan, the Chief Investment Officer (CIO) of Bitwise, a U.S. cryptocurrency investment firm, predicted on the 16th that the launch of an Ethereum Spot ETF in the U.S. could push Ethereum’s price above $5,000 .
Hougan believes that the inflow of funds into an Ethereum Spot ETF would have a greater impact on the price of Ethereum compared to Bitcoin Spot ETF. However, he also mentioned that Ethereum might not hit its highest price immediately.
Reasons for Delayed Price Surge
Hougan thinks the price surge might take time due to the following:
Grayscale already offers an investment trust called “ETHE,” which aims to convert into an ETF. There’s a possibility of funds flowing out from ETHE.
A similar situation occurred when the Bitcoin Spot ETF was launched.
for these reasons, Hougan expects significant price fluctuations in Ethereum during the initial weeks after the ETF launch. However he predicts that Ethereum will hit new highs by the end of the year especially if the inflow of funds exceeds market expectations.
Ethereum Spot ETF Has a Bigger Impact
Hougan believes an Ethereum Spot ETF would impact the market more than Bitcoin ETF due to supply and demand factors. Here is a simple comparison of Bitcoin’s supply and demand post-ETF launch
-Bitcoin purchased in ETFs: 263,965 BTC
-Bitcoin mined by miners: 129,181 BTC
“It’s not surprising that Bitcoin has risen more than 110% since October ’23 when the market began pricing in spot ETF launches, and more than 25% since January launches,” Hougan said.
Based on this, Hougan lists three reasons why the inflow of funds into an Ethereum Spot ETF would have a greater impact:
Lower short-term inflation rate for Ethereum
Unlike Bitcoin miners, Ethereum stakers don’t need to sell Ethereum
28% of Ethereum’s supply is staked and locked up
- In this analysis, Hougan used the term “ETP” (Exchange-Traded Product) instead of “ETF.” Although it’s important to distinguish between the two, this article uses “ETF” for easier understanding.