The anticipated introduction of Ether (ETH) exchange-traded funds (ETFs) is predicted to result in a shortage of supply, leading to an increase in price. This aligns with a report by CNF stating that over $3 billion worth of ETH has been withdrawn from centralized exchanges for self-custody.
Crypto investors are eagerly awaiting the official launch of the recently approved spot Ether ETFs, pending the final approval of the S-1 registration forms submitted by potential issuers. Bloomberg analyst James Seyffart believes that the US Securities and Exchange Commission (SEC) may approve them this month due to the close collaboration between the issuer and the regulator.
Analysts have observed that the official launch of the ETFs could potentially create a shortage of ETH in the market. Integral, a crypto accounting software firm, explains that ETF issuers would likely purchase and hold a significant amount of ETH, thereby reducing the available supply and driving up the price. This trend is already underway, as Crypto News Flash reports that exchange reserves have reached a six-year low after the withdrawal of over $3 billion worth of ETH since the ETF approval on May 23.
Furthermore, the supply shortage could be exacerbated by the increasing trend of staking. Currently, 25% of the ETH supply is staked. Although ETF issuers do not directly participate in staking, the rising price of ETH could benefit staking participants.
Integral highlights the advantages of this significant development, stating that the approval of S-1 forms would enhance institutional adoption of ETH and validate crypto as an asset class. Additionally, it could lead to the emergence of an “altcoin season” as the demand for ETH spills over to other cryptocurrencies.
BlackRock and Fidelity have already experienced success with their IBIT and FBTC ETFs, respectively, recording significant inflows. BlackRock’s IBIT alone accounted for 26% of its $65 billion ETF inflows this year, while Fidelity’s FBTC fund accounted for 56% of its $15.8 billion total ETF flows. These numbers raise the question of whether Ethereum will follow a similar trend to Bitcoin.
Currently, ETH is trading at $3,774, with a 1% decline in the last 24 hours and a 2% decline in the last seven days. However, it still maintains a positive gain of 21% in the last 30 days, with a 15.3% increase in its 24-hour trading volume.
According to crypto analyst Michael van de Poppe, ETH is gaining momentum and is poised to reach a new all-time high price.
