Introduction

The introduction of the Ethereum spot ETF is expected to bring a significant capital inflow potentially driving the price of Ether (ETH) to US$6,500 by the end of 2024.

According to the recent report from Steno Research, a Denmark-based firm, this newly approved investment product could attract a net inflow of between US$15 billion to US$20 billion in the first year.

Ethereum's Appeal to Wall Street

Steno Research associates Ethereum's appeal with several key factors attractive to Wall Street investors. The senior analyst of the firm, Mads Eberhardt, explains that Ethereum's unique qualities justify the optimistic projections for its spot ETF.

"The inflow is predicted to be around US$20 billion, and it is expected to occur within the first year after the ETF launch, possibly as early as next week," he said.

Eberhardt highlights that the projections take into account the potential outflow from Grayscale’s Ethereum Trust (ETHE). This shift is expected to drive ETH prices higher relative to the US dollar and Bitcoin.

The report indicates that the inflow will have a more significant impact on Ethereum compared to similar inflows into Bitcoin ETF due to the relatively lower market capitalization of ETH.

Regulatory Approval and Trading Commencement

The U.S. Securities and Exchange Commission (SEC) granted provisional approval for the Ethereum spot ETF on May 23, 2024.

Steno Research anticipates that the inflow will begin shortly after the SEC approves the next S-1 filing, which could happen as early as next week. This regulatory milestone is crucial for the ETF to commence trading and attract substantial investments.

"There will be a strengthening of the ETH/BTC ratio to 0.065 by the end of this year, driven by the expected inflows into the Ethereum spot ETF," revealed Steno Research.

The firm emphasizes that Ethereum's smaller market capitalization compared to Bitcoin means that even modest inflows into the Ethereum ETF can have a significant impact on ETH market dynamics.

In addition to the optimistic views from Steno Research, other firms also make bullish predictions regarding the Ethereum spot ETF. One of these is Galaxy Research, where they have projected a net inflow of US$5 billion in the first five months after the ETF launch.