Bitwise Predicts ETH’s Price to Surpass $5,000 Post-Ethereum ETF Launch

full version at beincrypto

Matt Hougan, Chief Investment Officer at Bitwise, forecasts Ethereum’s (ETH) price soaring to new heights following the launch of a spot Ethereum exchange-traded fund (ETF).

This projection stems from an anticipated significant capital inflow into Ethereum, driven by the launch of these ETFs.

What’s Driving Bitwise’s $5,000 Ethereum Prediction?

Hougan’s analysis suggests that while the initial weeks after the ETF launch might be volatile, the overall trend points towards strong bullish momentum by year-end. His argument pivots on the basic economic principle of supply and demand.

He explains that while ETFs do not alter the fundamental nature of the underlying asset, they introduce new sources of demand. When spot Bitcoin (BTC) ETFs launched, demand significantly outpaced the new supply generated by miners, driving up Bitcoin’s price.

“BTC has risen ~25% since the launch of Bitcoin [exchange-traded products] ETPs on January 11, and more than 110% since the market started pricing in a launch in October 2023. Will we see the same sort of impact with ETH? Actually, I think it might be bigger,” he said.

Hougan projects that the launch of Ethereum ETFs could attract upwards of $15 billion in new assets within the first 18 months. Given Ethereum’s current trading price of around $3,400, he believes it is plausible for ETH to challenge its previous all-time high and potentially exceed $5,000.

Additionally, he highlights other primary reasons for this optimistic outlook. These include Ethereum’s lower short-term inflation rate, the non-compulsory selling behavior of ETH stakers, and the substantial portion of ETH being staked or locked in smart contracts.

Bitwise’s report echoes earlier projections by VanEck, another asset management giant. In the base case, the firm predicted that ETH would reach $22,000 by 2030. VanEck’s confidence also stems from the anticipated approval of spot Ethereum ETFs, among other things.

Juan Pellicer, Senior Researcher at IntoTheBlock, adds weight to these bullish predictions from Bitwise and VanEck. He noted that after the spot Bitcoin ETF’s introduction, accumulation by large holders skyrocketed, driving BTC prices up.

While he anticipates a similar impact with the Ethereum counterpart, Pellicer expects lower institutional demand for ETH. However, on-chain data shows that large holders have been accumulating.

“Over the past month, net outflows from the largest wallets occurred in only two days, with over 1.4 million ETH accumulated during this period,” he elaborated.

Large Ethereum Holders Netflow. Source: IntoTheBlock

BeInCrypto reported that experts predicted that the US Securities and Exchange Commission (SEC) could approve these ETFs sometime this week. However, Bloomberg’s ETF analyst Eric Balchunas has indicated that the SEC might greenlight the ETFs by July 23.

Despite the delay, the crypto community remains optimistic about the approval. If the final offering documents meet the required conditions, major potential issuers can launch their ETFs simultaneously.