Ethereum
Can Spot ETFs Push Ethereum (ETH) Price Past $4,000?
Ethereum (ETH) experienced volatility primarily due to its alignment with broader market trends.
Despite the approval of spot ETH ETFs, the event has yet to impact the price. However, this could change in the near future.
Do Ethereum ETFs have a bright future?
The movements of spot ETFs could have a significant impact on the price of Ethereum in the coming months. Earlier this week, the U.S. 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 account for 20-50% of net inflows into BTC ETFs in the first five months, with a target of 30%, implying $1 billion per month in net inflows,” said Charles Yu, VP of Galaxy Research. 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 eventually ETFs only account for 14%. This raises doubts as to whether Ethereum spot ETFs will reach $1 billion in monthly inflows.
Learn more: Ethereum ETF Explained: What It Is and How It Works
Bitcoin Spot ETF Market Share. Source: The block
Uncertainty over the success of ETH ETFs in a relatively bear market could also lead to higher market maker bonuses. Gamma distribution risk, involving the sensitivity of options to price changes, requires market makers to adjust their strategies. With the added uncertainty of ETH ETFs, they will likely increase their premiums to cover possible extreme price swings.
“ETH can still get effective support from market makers who are hedging on the bearish 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 added uncertainty brought by ETH ETFs, the pricing of ETH tail risk is relatively high,” Griffin Ardern, Head of BloFin Research & Options, told BeInCrypto.
Simply put, market makers could charge more to account for the risk of the price of ETH being affected by something very unusual and extreme. This means investors have to pay extra to hedge 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 Profit immediately upon the launch of spot ETFs.
ETH Price Prediction: Eyeing New Highs
Ethereum price at $3,395 far from established a new all-time high. The second-largest cryptocurrency rallied more than 30% after the ETH spot ETF was approved, 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 broader market.
The situation could change as the market gets closer to the launch of ETFs. The price of Bitcoin started 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 in an attempt to break above $4,000. A successful breach 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
In accordance with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decision. Please note that our Terms and conditions, Privacy PolicyAnd Disclaimer have been updated.