With the Ethereum Spot ETFs Set to Start Trading On Tuesday, July 23, expectations for the ETH price increased significantly. Many analysts and market experts came forward to predict that this would be a major move for the ETH price, pushing it to new all-time highs. However, one analyst warned investors to be cautious during this time as the launch of Ethereum Spot ETFs may not have the desired effect immediately.
Why Ethereum Spot ETFs May Cause a Drop
While Ethereum Spot ETFs going live for trading have been well-received by the crypto community, crypto expert Benjamin Cohen has highlighted another alarming development that could send the price of ETH collapses. This time, it is the supply of ETH that is increasing rapidly.
In the X (formerly Twitter) jobCohen points out that ETH supply has become inflationary again. For reference, the Ethereum Merger Previously, the ETH supply was deflationary, with transaction burns sending hundreds of thousands of ETH to the dead wallet.
However, recently, with activity hitting new lows on the Ethereum NetworkThe supply has become inflationary because there are not enough transaction fees burned to exceed the new supply. Specifically, the crypto expert revealed that the supply has increased by 60,000 ETH in just one month.
But if supply continues to increase at this rate, Cohen says it will only take December for supply to return to where it was before the merger. Unless there is a reversal and supply becomes deflationary again, this new supply could jeopardize inflows into Ethereum Spot ETFs and push the price of ETH down instead.
ETH Spot ETF Trading Is Getting Closer
Last week, the Chicago Board Options Exchange (CBOE) announcement that a total of five Spot Ethereum ETFs will go live for trading on July 23, 2024. These funds include Fidelity (FETH), VanEck (ETHV), 21Shares (CETH), Invesco (QETH) and Franklin Templeton (EZET), all of which will be vying for the top spot.
So far, There was a battle over feeseach fund trying to outdo the others with lower fees. For example, the Franklin Templeton fund offers a low fee of 0.19%, beating out Bitwise and VanEck’s 0.2% and beating BlackRock, Fidelity and Invesco Galaxy, which have set their fund fees at 0.25%.
Like many others, Bitwise CIO Matt Hougan has expressed optimism as Ethereum Spot ETFs are set to begin trading. predicted that these funds could see up to $15 billion in inflows in less than two years after their launch.
Featured image created with Dall.E, chart by Tradingview.com
