ETFs
Can Spot ETFs Push Ethereum (ETH) Price Past $4,000?
Ethereum (ETH) has experienced volatility primarily due to its alignment with broader market trends.
Despite the approval of ETH spot ETFs, the event has not yet had an impact on the price. However, this could change in the near future.
Do Ethereum ETFs Have a Bright Future?
Movements in spot ETFs could have a substantial impact on the price of Ethereum in the coming months. Earlier this week, the United States Securities and Exchange Commission (SEC) approved Spot ETF listing by early July. This has significantly increased investor expectations.
“We expect net inflows into ETH ETFs to be 20-50% of net inflows into BTC ETFs over the first five months, with 30% as a target, implying $1 billion per month in net inflows” , said Charles Yu, vice president of the Galaxy research team. declared.
However, these optimistic forecasts do not seem entirely realistic. To put things in perspective, Bitcoin spot ETFs have only seen $857 million in inflows as of June 21, despite holding 84% of the total ETF market share, with future ETFs only account for 14%. This raises doubts about the ability of spot Ethereum ETFs to generate $1 billion in monthly inflows.
Learn more: Ethereum ETF explained: what it is and how it works
Bitcoin ETF Spot Market Share. Source: The block
Uncertainty about the success of ETH ETFs in a relatively bearish market could also lead to higher premiums for market makers. Gamma distribution risk, involving the sensitivity of options to price changes, incentivizes market makers to adjust their strategies. Given the added uncertainty associated with ETH ETFs, they are likely to increase premiums to cover possible extreme price movements.
“ETH can still get effective support from market makers who are hedging on the downside trajectory. As a solution to the gamma distribution risk mentioned above, market makers have also slightly increased their prices for tail risk. Due to the additional uncertainty brought by ETH ETFs, ETH tail risk pricing is relatively high,” Griffin Ardern, Head of BloFin Research & Options, told BeInCrypto.
In other words, market makers could charge more to account for the risk that ETH’s price will be affected by a very unusual and extreme event. This means that investors have to pay more to cover their bets, which can discourage excessive speculation and reduce volatility.
Learn more: How to invest in Ethereum ETFs?
Although active risk management can help stabilize its price by providing support and mitigating significant price drops, Ethereum price may struggle to benefit from this immediately upon the launch of spot ETFs.
ETH Price Prediction: Towards New Highs
Ethereum Price at $3,395 Far From Set a new all-time high. The second-largest cryptocurrency rose more than 30% after the approval of ETH spot ETFs, but nearly half of that gain was erased when ETH fell 13% earlier this month. Uncertainty surrounding the launch pushed the price down, along with bearish signals from the market.
The situation could change as the market approaches the launch of ETFs. The price of Bitcoin began to rise after the introduction of its spot ETFs, and a similar result is expected for Ethereum.
If Ethereum price managed to capitalize on the potential uptrend and rise to turn $3,829 into support, it would have successfully turned the 61.8% Fibonacci retracement into support. This line, also known as the bull market support floor, would result in further gains for ETH.
Learn more: Ethereum (ETH) Price Prediction 2024/2025/2030
Although a new historical record is still far away, ETH will at least have a chance is trying to cross the $4,000 mark. A successful breakout will be key to pushing the altcoin even higher.
But if this does not happen, Ethereum price risks remaining consolidated below $4,000. The likely support level could be between $3,700 and $3,800. Losing this would invalidate the bullish thesis.
Disclaimer
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