Ethereum Demand Expected to Surge with the Introduction of Specialized ETF Says Industry Expert
Norman Wooding, CEO of SCRYPT, shared with crypto.news that several indicators suggest Ethereum’s price could rise significantly if the SEC approves spot Ether ETFs. Wooding forecasted that spot Ethereum (ETH) ETFs would mirror the trajectory of spot Bitcoin (BTC) funds, potentially propelling ETH prices beyond $4,000. According to Wooding, the approval of spot ETH ETFs would dispel lingering concerns about the second-largest cryptocurrency and stimulate market demand.
Wooding suggested that if spot ETH ETFs capture between 10-20% of Bitcoin ETF flows, Ether could revisit its peak of $4,800. He emphasized that this move would tap into a previously untapped investor base, thereby increasing demand and setting a positive trajectory for ETH prices in the days, weeks, and months following approval.
Exclusive Grayscale spot Bitcoin ETFs accumulated over $35 billion in assets under management (AUM) within six months of trading, aligning with Wooding’s expectations. Similarly, Gemini crypto exchange projected that spot ETH funds could attract $5 billion in net inflows over the same period.
Observers have long anticipated the arrival of spot ETH ETFs, viewing it as a matter of when rather than if. However, skeptics have questioned the necessity of an institutional product that tracks spot Ether prices. Unlike Bitcoin, which is often likened to digital gold, Ethereum serves as a platform for decentralized applications, relying heavily on Ether as a liquid asset and economic vehicle.
One concern raised is the potential for large amounts of dormant Ether held by ETFs waiting for price increases, exacerbated by the absence of staking activity in proposed spot ETH funds. Despite these considerations, Wooding argued that the outcome could still prove beneficial for ETH supporters.
Wooding noted that reduced liquidity due to dormant ETH might incentivize greater participation in Ether staking, potentially increasing on-chain yield as spot ETFs absorb significant supply. He acknowledged potential initial impacts on DeFi liquidity but emphasized the broader market exposure and increased engagement that spot ETFs could bring.
Following the SEC’s initial approval of spot ETH ETFs last month, expectations are high among issuers and experts for final greenlights before the end of Q3 2024. Bloomberg’s James Seyffart suggested that regulatory approval could come as early as this month, while SEC chair Gary Gensler hinted at an outcome by the end of summer.
Despite speculations of potential rejections by the SEC, especially following actions against Consenys, Wooding expressed confidence in the approval of spot ETH ETFs this month. He believed that denying Ethereum funds could undermine the SEC’s credibility and trigger further regulatory discussions, potentially leading to improved future proposals.
Wooding acknowledged the possibility of temporary downward pressure on Ether prices in case of a denial but remained optimistic about Ethereum’s fundamental value and utility. He anticipated market stabilization as investors refocus on its technological advancements and real-world applications.
For more insights on Ethereum ETF sentiment, experts like those from Fundstrat have argued that sentiment around Ethereum ETFs may be overly pessimistic.
