Ethereum

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Optimism

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Grayscale Bitcoin Trust

With spot Ether exchange-traded products (ETPs) set to hit the markets next Tuesday, industry experts predict Ethereum (ETH) could reach a new all-time high soon after.
Matt Hougan, Chief Investment Officer at Bitwise, outlines three key reasons why Ethereum might soar above $5,000 following the ETF launch.
<h2 dir="ltr" id="span-span-new-sources-of-demand-span-span">New Sources of Demand</h2>
Hougan explains that while ETFs do not change the fundamental nature of the underlying asset, they introduce new sources of demand.&nbsp;
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When spot Bitcoin (BTC) ETFs were launched, the demand significantly outpaced the new supply generated by miners, driving Bitcoin’s price up.&nbsp;
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He draws a parallel to Ethereum, stating:
&nbsp;
<blockquote>
 “BTC has risen ~25% since the launch of Bitcoin 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.”
</blockquote>
<h2 dir="ltr" id="span-span-potential-influx-of-investment-span-span">Potential Influx of Investment</h2>
Hougan highlights several reasons for his optimistic outlook:
<ul>
 <li>Lower Short-Term Inflation Rate: Ethereum’s slower supply growth compared to Bitcoin.&nbsp;</li>
 <li>Non-Compulsory Selling Behavior of ETH Stakers: Unlike miners, ETH stakers are not required to sell their holdings immediately.&nbsp;</li>
 <li>Substantial Portion of ETH Being Staked or Locked in Smart Contracts: More than 33 million Ether are staked today, nearly 28% of the entire cryptocurrency’s supply. This Ether is locked up for a set period, meaning it cannot be withdrawn or sold immediately.</li>
</ul>
Hougan projects that the launch of Ethereum ETFs could attract upwards of $15 billion in new assets within the first 18 months.&nbsp;
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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.
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Ethereum operates on a proof-of-stake consensus algorithm, which means it doesn’t require industrial-grade mining operations to keep the network secure.&nbsp;
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Instead, users lock up 32 Ether (worth roughly $111,000 today) to become validators. This structure is expected to pay significant dividends and enable the new ETFs to outperform Bitcoin funds.
<h2 dir="ltr" id="span-span-broader-market-optimism-span-span">Broader Market Optimism</h2>
David Brickell, Head of International Distribution at FRNT Financial, shares Hougan’s optimism. He&nbsp;<a style="text-decoration:none" href="https://www.dlnews.com/articles/markets/experts-on-ether-price-after-ethereum-etf-launch/">predicts</a> that both Bitcoin and Ethereum will reach all-time highs by the end of June.&nbsp;
&nbsp;
<blockquote>
 “Spot Ethereum ETFs approvals, a more positive outlook on the economy, and a smattering of crypto-friendly votes on Capitol Hill signal that the world’s two leading cryptocurrencies will enjoy strong tailwinds over the next few weeks,” he said.&nbsp;
</blockquote>
Brickell forecasts prices of $80,000 for Bitcoin and $5,000 for Ethereum.
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Further, Jacob Joseph, a research analyst at cryptocurrency data firm CCData, also expects Ethereum to hit a new record. He predicts that investors will pour $3.9 billion into US spot Ethereum ETFs within the first 100 days of their launch, extrapolating this sum from the performance of the first 10 spot Bitcoin ETFs.
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Despite this, Joseph warns that Ethereum may face challenges because of outflows from the Grayscale Ethereum Trust. The Grayscale Bitcoin Trust has experienced over $17.7 billion in outflows since its January launch, according to BitMEX research.

Ethereum Spot ETFs Expected to Drive ETH Above $5000: Analyst

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