Ether (ETH) saw a significant price increase, surpassing $3,500 as anticipation builds for the launch of U.S.-based spot exchange-traded funds (ETFs). However, concerns linger regarding the potential impact of Grayscale’s $9 billion ETH Trust on the market.
There is a cautious outlook on the inflows expected for the new ETFs, with some experts predicting a slow start in the initial weeks. Vivien Wong from HashKey Capital’s Liquid Funds pointed out that Grayscale’s selling pressure could offset the positive effects of new inflows, leading to downward market pressure.
In addition to the worries about Grayscale’s ETH Trust, there are concerns about Ether’s inflation rate and the impact it may have on the token supply. Despite a recent increase in ETH supply, there have been expectations for a reduction following the merge. If the inflation rate continues at the current pace, ETH could become an inflationary asset again within six months.
Despite these concerns, ETH managed to reverse losses from the previous trading session, gaining 0.57% over the past 24 hours. This performance outperformed the broader CoinDesk 20 (CD20) index, which experienced a 1.7% decline.
The approval of S-1 filings for ETFs by eight issuers, including BlackRock, by the U.S. Securities and Exchange Commission on Monday has sparked a debate among market observers. The question arises whether ETH ETFs will outperform Bitcoin ETFs, which have attracted over $17 billion in net inflows since their launch in January.
Some experts believe that ETH’s utility and features like liquid staking could contribute to the success of ETH ETFs in attracting a larger investor base and increasing liquidity. While initial expectations for ETH ETFs in Hong Kong were not met, there is optimism that the U.S.-based ETFs will perform better.
Various financial institutions have different estimates for the potential inflows into ETH ETFs within the first six months. Citi predicts around $5.4 billion, Gemini suggests $5 billion, and JPMorgan estimates as much as $3 billion, with the possibility of reaching $6 billion if staking is allowed.
As the market awaits the launch of ETH ETFs and closely monitors Grayscale’s ETH Trust, the future price trajectory of Ether remains uncertain. Investors and analysts will be closely watching how these developments unfold in the coming weeks.