With ethereum spot ETFs expected to begin trading on Tuesday, July 23, expectations for the eth price have skyrocketed. Numerous analysts and market experts have predicted that it will be a major rally for the eth price, propelling it to new all-time highs. However, one analyst has warned investors to be cautious during this time as the launch of ethereum spot ETFs may not have the expected effect right away.
Why ethereum Spot ETFs May Lead to a Crash
While the ethereum spot ETFs that were launched for trading were welcomed by the crypto community, crypto expert Benjamin Cohen pointed out another alarming development that could send the eth price plummeting. This time, it is the rapidly increasing supply of eth.
On the x (formerly twitter) x.com/intocryptoverse/status/1814360169150652907″ rel=”nofollow” target=”_blank”>mailCohen notes that the eth supply had become inflationary once again. For reference, the ethereum meltdown previously made the eth supply deflationary, with transaction burns sending hundreds of thousands of eth to the dead wallet.
However, recently, with activity dropping to new lows on the ethereum network, the supply has become inflationary as not enough transaction fees are being burned to overcome the new supply. More specifically, the cryptocurrency expert revealed that the supply had increased by 60,000 eth in just one month.
Now, if supply continues to increase at this rate, Cohen explains that it will only take until December for it to return to what it was before the merger was completed. Unless a reversal occurs and supply becomes deflationary once again, this new supply could undermine inflows into ethereum spot ETFs and instead push the price of eth lower.
eth Spot ETF Trading Coming Soon
Last week, the Chicago Board Options Exchange (CBOE) announced that a total of five spot ethereum ETFs will begin trading on July 23, 2024. These funds include Fidelity (FETH), VanEck (ETHV), 21Shares (CETH), Invesco (QETH), and Franklin Templeton (EZET), all of which will be vying for the top spot.
So far, it has been a battle of fees, with each fund trying to outdo the other with lower fees. For example, the Franklin Templeton fund offers a low fee of 0.19%, beating Bitwise and VanEck's 0.2% and BlackRock, Fidelity and Invesco Galaxy, which have set their fund fees at 0.25%.
Like many others, Bitwise CIO Matt Hougan has expressed optimism as ethereum spot ETFs are set to begin trading. Hougan ethereum/bitwise-cio-bullish-on-spot-ethereum-etfs-envisions-15-billion-inflows/” rel=”nofollow noopener” target=”_blank”>predicts that these funds could see up to $15 billion in inflows in less than two years after their launch.
Featured image created with Dall.E, chart from Tradingview.com
