Ethereum’s spot price is poised to be more sensitive to ETF inflows than Bitcoin’s, says crypto investment manager Tom Dunleavy.
Ether exchange-traded funds (ETFs) are anticipated to attract up to $10 billion in new inflows in the months following their launch, propelling Ether prices to record highs by the end of the year, according to Dunleavy, a managing partner at crypto investment firm MV Global.
In a discussion with Cointelegraph, Dunleavy remarked, “We saw $15 billion in flows for Bitcoin. I think we’re probably going to see $5 billion to $10 billion for Ethereum. I expect a very positive price impact, sending us to new all-time highs by early Q4.”
Currently, eight spot Ether ETFs are awaiting final approval from United States regulators, with expectations that trading could commence imminently, potentially as soon as this month. These funds will join the existing array of approximately a dozen Bitcoin ETFs, which have been trading since January. Collectively, Bitcoin ETFs currently manage around $15.9 billion.
Dunleavy projects that ETH ETFs will attract approximately $1 billion per month as a “base case” for the coming months. He noted that compared to Bitcoin, Ethereum is “less available on exchanges,” leading to thinner order books and less supply for purchase. This scarcity means that Ethereum’s spot price will be even more responsive to buying demand from ETFs than Bitcoin’s.
“The BTC ETF led to a price appreciation of 36% from the January 10th launch date to the peak, and more than 50% from the time of initial speculation and rumors,” Dunleavy detailed in a Q2 investor memo shared with Cointelegraph. He expressed confidence in a strong buy pressure for ETH, driven by a more straightforward narrative that traditional investors can grasp. “ETH has cash flows. It can be described as a tech stock, the app store of crypto, or an internet bond. This is a much easier sell for financial advisors than ‘digital gold,’” the memo explained.
So far this year, ETH’s performance has lagged behind BTC’s, with relatively deeper drops during downturns, according to data from Cointelegraph Markets Pro and TradingView. Dunleavy cautioned that a rebound in ETH’s performance might not necessarily extend to altcoins, partly due to a lack of overlap between the crypto institutional and retail markets.
Ether ETF investors are likely to be different from the typical on-chain users. “They’re going to be users who were holding the stuff in their 401k,” Dunleavy said, indicating that the new wave of investors will predominantly come from traditional financial backgrounds rather than the crypto-native crowd.
The anticipation around Ether ETFs marks a significant moment for the cryptocurrency market, signaling a potential influx of capital from institutional investors who might have been previously hesitant to enter the space. The expected inflows could drive a surge in Ether’s market value, making it an attractive investment for those looking to diversify their portfolios with digital assets.
The arrival of Ether ETFs could also signify a shift in the market dynamics, as more investors view Ethereum not just as a cryptocurrency but as a versatile financial asset with various applications. The comparison of ETH to a tech stock or an internet bond highlights its multifaceted nature and potential for long-term growth, which could appeal to a broader audience of investors.
As the market awaits the official launch of these ETFs, all eyes will be on the regulatory developments and the initial performance of the funds. Should Dunleavy’s predictions hold true, the crypto market could witness a significant transformation with Ether leading the charge towards new all-time highs. This development underscores the evolving landscape of digital assets and their growing acceptance in the traditional financial world.
