Ethereum, the world’s second-largest cryptocurrency, is poised for a potential surge as anticipation grows around forthcoming exchange-traded funds (ETFs) designed to track its price.
While Bitcoin has dominated headlines with record highs fueled by new U.S. ETFs, Ethereum has largely remained in the shadows. However, with ETFs for Ethereum expected to debut soon, market analysts foresee a possible rally surpassing its previous peak of $4,867.60 in November 2021.
Thomas Perfumo, head of strategy at Kraken crypto exchange, highlighted Ethereum’s lower spot liquidity compared to Bitcoin, suggesting that even a modest influx of capital could have a significant price impact.
Recent market dynamics, including the liquidation of tokens from the defunct Mt. Gox exchange and upcoming macroeconomic events, such as Federal Reserve decisions and elections, add layers of uncertainty to cryptocurrency markets.
“While Bitcoin saw substantial gains following the introduction of spot ETFs, Ethereum has yet to reach its previous highs,” noted Jag Kooner, head of derivatives at Bitfinex, underscoring the potential for increased volatility influenced by regulatory developments.
Analysts predict that the launch of Ethereum ETFs could tighten its supply dynamics, potentially amplifying price movements relative to Bitcoin. Despite expectations of lower initial investor interest compared to Bitcoin, Ethereum’s market capitalization suggests similar potential for price impact per dollar invested in ETFs.
Zach Pandl, managing director of research at Grayscale Investments, emphasized Ethereum’s constrained supply due to staking and smart contract lock-ups, factors that could further drive up prices in response to ETF demand.
“In Ethereum, the supply situation is even more constrained than it was for Bitcoin,” commented Matt Hougan, chief investment officer at Bitwise, noting the potential scarcity effect that could boost prices.
Market predictions vary widely, with Standard Chartered forecasting Ethereum could reach $8,000 by year-end, while VanEck raised its long-term price target to $22,000 by 2030 following plans to launch a spot Ethereum ETF.
However, some caution that the potential impact of ETFs on Ethereum’s price may already be factored into current valuations, with Ethereum showing a 29% increase year-to-date despite remaining below its peak.
“As we anticipate the launch of Ethereum ETFs, market valuations for both Bitcoin and Ethereum are relatively high compared to earlier this year,” added Pandl of Grayscale Investments.
