Ethereum ETFs Poised to Boost ETH to New Highs
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Regulatory Approval and Market Launch
Eight spot ETH ETFs are awaiting final approval from U.S. regulators and are expected to begin trading soon, possibly within this month. These funds will join the existing roster of Bitcoin (BTC) ETFs, which started trading in January and collectively manage approximately $15.9 billion. Dunleavy predicts that ETH ETFs will attract around $1 billion per month as a base case for the next few months.
Price Sensitivity and Investor Demand
Compared to BTC, ETH is less available on exchanges, which means thinner order books and higher price sensitivity to buying demand from ETFs. Dunleavy noted that the BTC ETF led to a price appreciation of 36% from its January launch date to its peak, with over 50% gains from the time of initial speculation and rumors. He expects a similarly strong buy pressure for ETH, driven by a clear narrative that traditional investors can understand.
Appeal to Financial Advisors
ETH's ability to generate cashflows and its description as a tech stock, app store of crypto, or internet bond makes it an easier sell for financial advisors compared to Bitcoin's "digital gold" narrative. Dunleavy believes that this comprehensible narrative will attract strong buy pressure from investors.
Performance Outlook
Despite ETH's lagging performance compared to BTC this year, Dunleavy remains optimistic about its potential rebound. However, he cautioned that this rebound might not extend to altcoins due to the distinct profiles of institutional and retail markets. Ethereum ETF investors are expected to be more traditional, holding assets in their 401ks rather than being onchain users.
With the launch of these ETFs, Ethereum stands poised to capture significant investor interest and potentially achieve new price milestones.