Bitrabo Editorial
Anticipation is high as the Spot Ethereum ETFs are set to debut on July 23, with many expecting this event to have a significant positive impact on the price of ETH. While numerous analysts and experts foresee new all-time highs for Ethereum, one analyst urges caution, emphasizing that the immediate effects of the Spot Ethereum ETFs may not meet expectations.
Factors Potentially Leading to a Decline in ETH Price
Despite the positive reception of the upcoming Spot Ethereum ETFs within the cryptocurrency community, expert Benjamin Cohen warns of a concerning development that could potentially trigger a crash in the ETH price, namely, a rapid increase in ETH supply.
Cohen highlighted in a post on X (formerly Twitter) that the ETH supply has shifted back to being inflationary. Following the Ethereum Merge, which previously made the ETH supply deflationary through burns from transactions, the recent decline in network activity has caused the supply to become inflationary again. This trend was underscored by a 60,000 ETH increase in supply within just one month.
Should this escalation in supply persist, Cohen explains that by December, the supply could revert to pre-Merge levels unless a shift occurs to restore a deflationary trajectory. This potential scenario could counteract the anticipated inflows from Spot Ethereum ETFs and result in a downward pressure on the ETH price.
Approaching Commencement of Spot ETH ETFs Trading
The Chicago Board Options Exchange (CBOE) recently announced the scheduled trading commencement for five Spot Ethereum ETFs on July 23, 2024. These offerings, including Fidelity (FETH), VanEck (ETHV), 21Shares (CETH), Invesco (QETH), and Franklin Templeton (EZET), will compete for market dominance.
An ongoing fee competition has emerged among these funds, with each striving to offer lower fees than the others. For instance, the Franklin Templeton fund boasts a competitive fee of 0.19%, surpassing the fees of Bitwise and VanEck at 0.2% and leading over BlackRock, Fidelity, and Invesco Galaxy at 0.25%.
Bitwise CIO Matt Hougan, along with numerous others, expresses optimism about the impending trading debut of the Spot Ethereum ETFs. Hougan envisions potential inflows of up to $15 billion within two years of the ETFs’ launch, signaling a positive outlook for the market.