- Ethereum ETFs will push ETH to a new all-time high above $5,000, says Bitwise.
- Citi predicts ETH ETFs will attract around $5 billion in net inflows within six months of launch.
- Peter Brandt suggests ETH could rally 60% if it makes a key move.
Ethereum (ETH) is up nearly 2% on Tuesday following predictions from Bitwise chief investment officer (CIO) Matt Hougan that ETH ETFs could help push ETH to a new all-time high above $5,000. Other predictions from Citi Bank and trader Peter Brandt also align with Hougan's position.
Daily digest market movers: Ethereum ETFs deciding factor for new all-time high
Bitwise CIO Matt Hougan predicted that inflows across Ethereum ETFs will boost ETH's price to a new all-time high above $5,000.
"By year-end, I'm confident the new highs will be in. And if flows are stronger than many market commentators expect, the price could be much higher still," said Hougan in a recent memo to investors.
Hougan believes ETH ETFs will have a bigger impact on ETH's price than Bitcoin (BTC) ETFs had on BTC due to the new demand that ETFs bring to commodities without altering their fundamentals. BTC has seen a 110% rise since October, when Bloomberg announced the SEC would likely approve Bitcoin ETFs.
Bitcoin’s Returns since January 2023
He compared Bitcoin's previous 1.7% inflation rate to Ethereum's, which has hovered from negative to 0% in the past year. ETH has maintained such a deflationary status since the implementation of Ethereum Improvement Proposal 1559 (EIP-1559), which reduces the amount of ETH in circulation upon every transaction on the Mainnet.
"Significant new demand meets 0% new supply? I like that math. And if activity on Ethereum ticks up, so does the amount of ETH being consumed. That's another lever of organic demand working in investors' favor," stated Hougan.
Hougan also highlighted how the lower economic cost of Ethereum's consensus mechanism reduces the selling pressure on ETH, unlike that of Bitcoin miners, who have to sell a portion of their holdings to cover up costs.
Lastly, he mentioned how increased staking and ETH usage in DeFi protocols have already removed over 40% of ETH off the market.
Hougan believes these factors, combined with his earlier predictions of ETH ETFs raking in $15 billion in the first 18 months of launch, primes Ethereum for a new all-time high.
Meanwhile, banking giant Citi predicted in a research report last week that Ethereum ETFs could see up to 30%-35% of the flows seen in Bitcoin ETFs. That would give an equivalent of about $4.7 billion to $5.4 billion of net inflows, noted Citi analysts.
The Securities & Exchange Commission (SEC) will likely greenlight ETH ETFs for trading next Tuesday. This follows updates from Bloomberg analyst Eric Balchunas and Reuters, which claimed sources told them the regulator asked issuers to submit their final S-1 drafts this week in preparation for a Tuesday, July 23 launch.
ETH technical analysis: Could Ethereum rally 60% to $5,627?
Ethereum is trading around $3,460 on Tuesday, up over 2% on the day. In the past 24 hours, ETH witnessed over $45 million in liquidations, with shorts leading the line at $25.36 million and longs at $19.92 million in liquidations.
ETH's options open interest has risen 13% in the past 24 hours to $6.66 billion. Open interest is the total amount of unsettled contracts in a derivatives market. An increase in options OI combined with price growth indicates a potential for more upside in a market. As a result option traders could be expecting higher ETH price and are reacting accordingly.
This aligns with a recent prediction from popular trader and analyst Peter Brandt.
Brandt predicted that ETH could see a new all-time high soon after finding support at around $2,800, the lower boundary of a four-month plus rectangle, "which was a retest of the Feb completion of a horn bottom." If ETH can complete a move to the rectangle's upside of $4,093, Brandt suggests that it could set a new all-time high at $5,627.
ETH/USDT Weekly chart
In the short term, if ETH rises above $3,502, over $34.8 million worth of short positions will be liquidated from the market.
Cryptocurrency prices FAQs
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.
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