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Analysis of Incoming Ether ETF Launch and Its Impact on Ethereum Relative to Bitcoin

Jul 3, 2024

The imminent introduction of Ether exchange-traded funds (ETFs) around July 8 is anticipated to enhance Ethereum's performance compared to Bitcoin in the weeks following their commencement of trading in the United States.

As stated by K33 analysts Vetle Lunde and David Zimmerman, Bitcoin might encounter selling pressure when $8.5 billion worth of BTC is repaid to creditors of the collapsed Mt. Gox exchange this week.

In contrast, Ethereum has been lagging behind Bitcoin for over a year, despite Bitcoin's significant gains driven by inflows exceeding $14 billion into Bitcoin exchange-traded products this year.

Lunde and Zimmerman predict that Ethereum may undergo some initial volatility post the ETF introduction. Nevertheless, they are optimistic that the capital inflows into the funds will likely uplift Ethereum's price gradually.

Lunde emphasized that ETFs serve as a favorable stimulus for bolstering Ethereum's prominence relative to Bitcoin as the season advances and the capital flows increase. He perceives the current ETH/BTC prices as a valuable opportunity for meticulous traders.

The analysts hold a bullish stance on Ethereum, envisioning net inflows of 0.75-1% of its circulating supply following the ETF debut. This optimism persists despite the market's dissent evident through Ether futures trading at a discount to Bitcoin futures and an ETH/BTC ratio of 1 ETH to 0.055 BTC.

Despite hitting a yearly low of 0.045 on May 24 due to a value decline relative to Bitcoin over the past year, Ether's price against Bitcoin swiftly recovered to 0.055 after the SEC's abrupt approval of Ether ETFs, according to CoinMarketCap records.

Lunde and Zimmerman highlighted that Ether futures open interest remains elevated, suggesting that numerous traders are leveraging considerably to speculate on Ethereum's potential price movements prior to the ETF launch.

They perceive the ETFs as a prime opportunity for Ethereum to fortify its position against Bitcoin in the market.

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