thecoinrise.com
The launch of spot Ether (ETH) exchange-traded funds (ETFs) in the United States is poised to significantly impact the cryptocurrency market, potentially enabling ETH to outperform Bitcoin (BTC) in the weeks following their debut. According to analysts from K33 Research, Vetle Lunde and David Zimmerman, these ETFs, expected to go live as soon as July 8, could serve as a substantial catalyst for ETH’s price.
Golden Egg for Ether
In their July 2 report, Lunde and Zimmerman described the upcoming Ether ETFs as a “golden egg” for ETH, contrasting the anticipated boost with the selling pressure Bitcoin is likely to face. This pressure comes from the $8.5 billion worth of BTC being returned to creditors of the collapsed exchange Mt. Gox starting this week.
Over the past year, ETH has underperformed compared to Bitcoin, which has seen market-leading gains supported by over $14 billion in flows into Bitcoin exchange-traded products. Despite this, the analysts believe that the influx of investments into the new Ether ETFs will eventually bolster ETH’s price, similar to what occurred with Bitcoin ETFs.
ETH Might Initially Stumble
Lunde and Zimmerman anticipate that ETH might initially stumble following the ETF launches but expect the inflows to significantly strengthen its price over time. Lunde wrote, “ETFs are a solid catalyst for relative ETH strength as the summer progresses and flows accumulate, and I firmly view current ETH/BTC prices as a bargain for the patient trader.” They maintain a bullish outlook for ETH, forecasting net inflows equivalent to 0.75-1% of ETH’s circulating supply in the five months following the launch.
However, the market has not fully aligned with their optimism. The analysts pointed out that Ether futures are trading at a relative discount to Bitcoin futures, and the ETH/BTC price ratio is currently around 1 ETH to 0.055 BTC. Despite this skepticism, they argue that the approval of Ether ETFs by the SEC has already begun to shift market sentiment, as evidenced by the ETH/BTC ratio ticking up to 0.055 from a yearly low of 0.045 on May 24.
Reversing ETH’s Downtrend
The approval of these ETFs caught many analysts by surprise and has started to reverse ETH’s downward trend against Bitcoin. TradingView data shows a quick rebound in the price of Ether relative to Bitcoin following the SEC’s decision.
In addition, Lunde and Zimmerman highlighted the relentless open interest in Ether futures, indicating that many traders are leveraging heavily on ETH’s potential price movements ahead of the ETF launch. This suggests a high level of confidence in ETH’s upcoming performance among market participants.