Ethereum’s price faces potential decline post-spot Ethereum ETF launch if its supply continues to rise. The increasing supply could revert to pre-Merge levels, affecting its price negatively.
Points
- Ethereum supply has been increasing since April 2024, potentially negating deflationary effects of the Merge.
- Spot Ether ETFs are launching, but their novelty may wear off, impacting ETH price.
- Ethereum’s supply could revert to pre-Merge levels, affecting investor sentiment.
- Despite potential short-term decline, long-term price prospects remain positive.
- Onchain analysts highlight Ethereum’s supply crisis and its impact on market dynamics.
Ethereum’s Supply Dynamics
Since the Ethereum Merge in September 2022, which transitioned the network to a proof-of-stake model, the supply initially dropped by 455,000 ETH by April 2024. However, this trend reversed, with an additional 150,000 ETH entering circulation, averaging an increase of 60,000 ETH per month. If this trend continues, the supply could return to pre-Merge levels, potentially impacting ETH’s price negatively.
Spot Ether ETFs Launching
Five spot Ethereum ETFs are set to begin trading on the Chicago Board Options Exchange on July 23, 2024. This includes offerings from major financial institutions like Fidelity and VanEck. While the initial launch may boost ETH’s price due to increased interest, the novelty might fade, leading to potential price declines if supply pressures persist.
Market Sentiment and Analyst Insights
Crypto trader Benjamin Cowen and onchain analyst Leon Waidmann have pointed out the current supply dynamics and their potential impact on Ethereum’s market performance. Waidmann notes a “supply crisis,” with exchange balances dropping to 10.2% and 39.3% of ETH locked in smart contracts, indicating tight supply conditions.
Price Projections
Despite short-term concerns, analysts maintain a positive long-term outlook for ETH. Cowen suggests that ETH’s price could be higher in 1.5 years, though he anticipates potential declines in the next few months due to the increased supply. At the time of writing, ETH is trading at $3,507.
Investment Implications
Investors should monitor the impact of the spot ETF launch on Ethereum’s price and supply dynamics closely. The increasing supply could lead to short-term price pressures, but the long-term fundamentals of Ethereum remain strong, with potential for significant gains as the network continues to evolve and attract more users.
解説
- Ethereum Supply Increase: The rising supply of Ethereum could offset the deflationary effects achieved post-Merge, impacting price dynamics.
- Spot Ether ETFs: The launch of spot ETFs may drive short-term interest and price increases, but the novelty effect could wear off, leading to potential price corrections.
- Market Dynamics: Onchain data indicating a supply crisis and high levels of ETH locked in smart contracts suggest tight supply conditions, which could influence price movements.
- Long-Term Outlook: Despite short-term supply concerns, Ethereum’s robust ecosystem and continued adoption provide a positive long-term price outlook.