The Ethereum ETFs took the market by surprise. Are they priced in?
The recent Ethereum ETF approvals came with only days of notice for market participants.Analysts say that despite the initial price response, the approvals may not yet be fully baked in.
While the market had months to prepare for the Bitcoin ETFs, it had just days for its Ethereum ETH -2.29% counterparts.
Even though this led to a quick price boost for ether and a surge in open interest, suggesting an influx of leveraged positions, there was little time for traders to get fully positioned. Plus, as there is a delay before the ETFs go live, there is currently a window over the next few weeks that could let slower traders make their moves ahead of the pending inflows. As a result, market analysts are suggesting that the approvals might not yet be fully priced in.
“No, I don't think it is priced in,” said DeFiance Capital co-founder Arthur Cheong. “Impossible for the market to price in such a major shift in expectations and positioning in a few days. Price is almost unchanged compared to 12 hours after the news came out.”
GSR research analyst Brian Rudick partially agreed. “All else equal, Ethereum’s price going forward will likely trade on inflows into the spot Ethereum ETFs once launched, as we saw with Bitcoin,” he said.
'Partially priced in'
Rudick noted that the price of bitcoin doubled since September, when the market began to accept the idea of an approved Bitcoin ETF. Half of its performance came in January ahead of the approvals and half during the strong inflows after they were approved.
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“While there are some differences — ETH is coming in at a higher starting point having been dragged up by BTC and there was something in ETH’s price for an eventual spot ETF approval even if not expected this month…but the approval is due to and accompanied by a changing U.S. stance towards crypto — the same pattern could play out with Ethereum and the spot ETH ETFs,” he added.
Rudick said he anticipates high initial inflows into the Ethereum ETFs. “Such strong flows would likely catalyze a second leg to ETH’s performance, where ETH could rise 50-100% in total from earlier this month,” he said.
“The Ethereum ETF approval is partially priced in,” concurred Tranchess co-founder Danny Chong. “We expect considerable volatility and potentially sideways movement in Ethereum’s price in the short term, driven by fluctuating demand and supply dynamics.”
Chong added that the ETF approvals could lead to increased institutional investment and broader adoption, resulting in an increased but more stabilized price over time.
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