As the Ethereum (ETH) spot exchange-traded funds (ETFs) is officially approved by the SEC and set to launch on July 23.
As the Ethereum (ETH) spot exchange-traded funds (ETFs) is officially approved by the SEC and set to launch on July 23, Algorithmic trading firm Wintermute believes demand may not live up to the high expectations set by many analysts
Wintermute's latest report offers a more conservative outlook on Ethereum ETFs. "Analysts hold varying views on Ethereum ETFs, with most estimates putting year-one annualized flows in the $4.8-$6.4 billion range," the report states. However, Wintermute forecasts lower-than-anticipated demand, predicting flows closer to $3.2 to $4 billion. The firm expects Ethereum ETFs to capture only 15% to 20% of the flow observed for Bitcoin ETFs and forecasts a price increase of 18% to 24%.
This projection is significantly lower than some more optimistic forecasts, such as one analyst's prediction that ETH could hit $5,000 following the ETF launch, representing a 50% increase. As of now, Ethereum is trading at approximately $3,475.66.
Wintermute attributes its cautious outlook to two main factors. First is the absence of a staking mechanism within the ETFs, which could diminish their appeal to yield-seeking investors. Staking allows users to delegate Ethereum tokens to the network in exchange for rewards. The inability to stake within these ETFs might make them less attractive compared to direct Ethereum holdings.
Secondly, Wintermute points to the lack of a cohesive narrative to attract investors. Unlike Bitcoin, which has successfully promoted itself as "digital gold," Ethereum's more complex ecosystem and diverse applications could make it challenging to present a unified investment thesis. However, the report notes that Ethereum's dual functionality, as both a digital currency and a platform for decentralized applications, could still appeal to investors interested in technological innovations and the varied applications of blockchain technology.
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