Ethereum (ETH) experienced a notable rally in the past week, gaining 10.4% to reach up to $3,500.
The SEC has reportedly granted preliminary approval to at least three issuers to start trading spot Ethereum ETFs on July 23, with a total of eight waiting for final regulatory approval. Matt Hougan, Chief Investment Officer at Bitwise, is optimistic about Ether’s price hitting $5,000 by the end of 2024. He cites factors such as Ether's low inflation rate, minimal costs for validators, and the fact that 28% of its supply is locked in staking.
Despite these forecasts and the overall crypto market capitalization increasing by 43% year-to-date in 2024, Ethereum investors remain surprisingly cautious. Typically, futures contracts should trade 5% to 10% higher than spot markets due to their extended settlement periods. Currently, the annualized premium for Ether's fixed-month contracts stands at 11%, indicating moderate optimism. However, this indicator has not maintained levels above 12% in the past month, raising concerns given the expected inflows from the upcoming spot ETF launch in the US. Similarly, Bitcoin’s basis rate also stands at 11%, suggesting no excessive bullishness among Ethereum investors.
From a macroeconomic perspective, the latest US Producer Price Index showed a 2.6% increase over the previous year, slightly above the anticipated 2.3%. This indicates that the US Federal Reserve still faces challenges in controlling inflation, which could continue to dampen demand. Furthermore, China's disappointing annual GDP growth of 4.7% could have negative implications for global stock markets.