The upcoming trading of Spot Ethereum ETFs on Tuesday, July 23, has created high expectations for the ETH price. Many analysts anticipate that this development will lead to new record highs for Ethereum. Nevertheless, one analyst cautions investors to be vigilant as the launch of the Spot Ethereum ETFs may not have an immediate positive impact.
Factors That Could Cause a Drop in ETH Price
While the introduction of the Spot Ethereum ETFs has been positively received by the crypto community, expert Benjamin Cohen has highlighted a concerning trend that could potentially cause a crash in the ETH price – a rapid increase in ETH supply.
In a post on X (formerly Twitter), Cohen pointed out that the ETH supply has started to inflate again. Following the Ethereum Merge, which had made the ETH supply deflationary, recent data indicates a shift towards inflation due to decreased network activity. With not enough transaction fees being burned to offset new supply, Cohen noted that the supply had risen by 60,000 ETH in just one month.
If this supply trend continues, Cohen predicts that by December, the supply could return to pre-Merge levels. Unless the supply reverts to a deflationary pattern, the increased supply may counteract the inflows from Spot Ethereum ETFs, potentially leading to a decline in the ETH price.
Approaching Launch of Spot ETH ETFs
Recently, the Chicago Board Options Exchange (CBOE) announced that five Spot Ethereum ETFs will commence trading on July 23, 2024. These funds, including Fidelity (FETH), VanEck (ETHV), 21Shares (CETH), Invesco (QETH), and Franklin Templeton (EZET), will be competing for market dominance.
There has been a fee competition among these funds, with each striving to offer lower fees than the others. For instance, Franklin Templeton is setting a competitive fee of 0.19%, surpassing Bitwise and VanEck at 0.2%, and outperforming BlackRock, Fidelity, and Invesco Galaxy, which have set their fees at 0.25%.
Bitwise CIO Matt Hougan, like many others, is optimistic about the impending trading of Spot Ethereum ETFs. Hougan has predicted that these funds could attract up to $15 billion in inflows within two years of their launch.
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