Impact of Ethereum Spot ETFs on ETH Price Prediction

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by Giorgi Kostiuk

2 years ago

Made with AI

Florent Koenig, a macro analyst at SwissBorg, recently discussed the potential effects of Ethereum Spot ETFs on the price of ETH.

In the analysis provided, a detailed scenario unfolds regarding the implications when ETH Spot ETFs enter the trading arena.

Forecasting the possible inflows into Ethereum ETFs presents a nuanced challenge. Koenig opted to rely on estimates from a variety of seasoned experts to outline a spectrum of anticipated values. Here's a glimpse into his findings:

  • Goldman Sachs projects that the forthcoming spot ETH ETFs could draw minimal net inflows ranging from $1 billion to $3 billion throughout the remainder of the year.
  • Bloomberg's Senior ETF Analyst, Eric Balchunas, speculates that Ethereum might capture around 15-20% of the inflows witnessed in Bitcoin ETFs.
  • Bitwise's Chief Investment Officer, Matt Hougan, envisions ETH ETFs attracting net inflows equivalent to 25%-50% of Bitcoin ETFs within the initial four months of trading.
  • The research team at Grayscale anticipates spot ETH ETFs to garner approximately 25%-30% of the demand observed for Bitcoin ETFs.

Drawing upon these estimations, Koenig formulated bear, bottom, and bull forecasts for potential inflows into the ETH ETF by the conclusion of 2024.

The pertinent question arises: How can the impact of these anticipated inflows into Ethereum on its price be predicted? Koenig recommends formulating certain assumptions grounded on the recent spot Bitcoin ETF. It postulates that roughly 75% of Bitcoin's recent price fluctuations can be ascribed solely to ETF net inflows. This implies that net inflows of ~$13.86 billion influenced Bitcoin by roughly +37.5%. In essence, each billion in net inflows into ETFs is projected to move Bitcoin by +2.7%.

Nonetheless, Bitcoin and ETH possess distinct attributes. Koenig also factored in other variables to gauge how Ethereum may respond for every billion dollars in net inflows:

  • The fully diluted value of Bitcoin presently stands at ~3.15 times that of Ethereum.
  • Roughly 27% of all Ethereum is staked.
  • Ethereum's supply has generally followed a deflationary trend of -0.184% post the Merge.

Based on these insights, Koenig posits that Ethereum exhibits 4 times the reactivity compared to Bitcoin, implying that for identical input, Ethereum will undergo movement four times more pronounced than Bitcoin. Consequently, each billion dollars in net inflows could propel Ethereum by +10.8%.

Taking all factors into consideration, Koenig presented varied prognoses regarding the price trajectory of Ethereum by the culmination of 2024:

  • Bear scenario: ETH concludes the year at $4,428.
  • Base case scenario: ETH stabilizes at $5,294 by the end of the year.
  • Bullish scenario: ETH surges to $6,730 by the close of the year.

This does not constitute investment advice.

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