ETFs Will Send Ether to All-Time Highs Above $5,000: Bitwise CIO

• Bitwise CIO Matt Hougan is confident that ether ETF inflows will have a bigger price impact than Bitcoin inflows.
• The analyst gave three reasons for his view.
• The recent prediction comes as ether ETFs look set to launch.

Experts have long predicted that ETFs will turbocharge crypto demand and send asset prices surging. The industry experienced what this demand could look like for the first time in 2024, as inflows to Bitcoin ETFs approved in January 2024 helped drive the asset to new all-time highs in March 2024 .

Fast forward to July, and the attention has shifted to ether as ETFs backed by the second-largest crypto asset by market cap are set to launch imminently . Amid the anticipation, many have been left wondering if ETF inflows will have as much of a positive price impact on ether as they have had on Bitcoin. According to Bitwise Chief Investment Officer Matt Hougan, the answer to this question is yes and more.

ETF Inflows to Send Ether Above $5,000 by Year End?

Bitwise CIO Matt Hougan is significantly optimistic about ether ETFs. In a Tuesday, July 16 note , Hougan disclosed that he expected inflows to ether ETFs to have a bigger price impact than flows to Bitcoin ETFs. He predicts that ether will eventually run up to new highs above the $5,000 price point by year’s end after a few initial weeks of choppy price action due to anticipated outflows from Grayscale’s $11 billion ether trust.

Hougan gave three reasons for his optimistic view on the impact of ether ETF flows, including ether’s lower inflation rate compared to Bitcoin, ether’s lack of miner selling pressure, and reduced ether in circulation due to staking and other DeFi operations requiring assets to be locked.

As highlighted by Hougan, Bitcoin’s inflation rate was 1.7% when ETFs launched compared to ether’s 0% over the past year, thanks to its token-burning mechanism introduced with EIP-1559. “Significant new demand meets 0% new supply? I like that math,” the Bitwise CIO enthused.

At the same time, the analyst explained that, unlike Bitcoin’s proof-of-work mechanism, which often requires miners to sell their rewards to cover expensive operating costs, stakers in ether’s proof-of-stake system bore no direct costs and had fewer incentives to regularly sell ether received for helping to secure the network.

Finally, as Hougan highlights, this staked ether, which continues to rise and now accounts for nearly 28% of the total ether supply, “is effectively off the market.”

Citing all these factors, the Bitwise CIO argued, “It’s hard to imagine ETH not challenging its old record.”

The Bitwise executive’s analysis comes as the launch timeline for spot ether ETFs finally appears clear after weeks of anticipation.

Ether ETFs Set For July 23 Launch

Citing anonymous sources, on Monday, July 15, Bloomberg Senior ETF Analyst Eric Balchunas disclosed that the SEC had told issuers that they were ready to greenlight ether ETF S-1 filings on Monday, July 22, setting the stage for a Tuesday, July 23 launch.

Should this timeline prove correct, the ether ETF launch would come exactly two months after the agency approved 19b-4 forms from the prospective issuers. These issuers include 21 Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Invesco, and VanEck, all of whom also offer Bitcoin ETFs approved in January 2024.

On the Flipside 

• Despite Hougan’s belief that ether ETF flows will have a greater price impact, he estimates that ether ETFs will likely rake in only $15 billion in the first 18 months. For context, Bitcoin ETFs have raked in over $16 billion in net inflows in the first six months of trading.
• Ether has become inflationary in recent months in an apparent fallout of the Dencun upgrade that has brought fees down and pushed activity to Layer 2 chains .

Why This Matters

Hougan’s analysis suggests that the ether ETF launch might be significantly more bullish than many expect.

Read this for more on the anticipated ether ETF launch:
Ether ETF Release Primed for July 23: Here’s What We Know

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