The impending launch of Ether (ETH) exchange-traded funds (ETFs) is predicted to cause a shortage in supply, leading to a subsequent increase in price. This aligns with a report from CNF, which states that over $3 billion worth of ETH has been withdrawn from centralized exchanges for self-custody.
Crypto investors are eagerly awaiting the official launch of the recently approved spot Ether ETFs, pending the final approval of the S-1 registration forms filed by prospective issuers. Bloomberg analyst James Seyffart believes that the US Securities and Exchange Commission (SEC) may give the green light this month, considering the close collaboration between the issuer and the regulator.
Analysts have observed that the official launch of ETH ETFs could result in a supply shortage. Crypto accounting software firm Integral explains that ETF issuers would buy and hold a large amount of ETH, effectively removing a significant portion of the asset from the open market and driving up the price. Exchange reserves have already fallen to a six-year low, with over $3 billion worth of ETH being withdrawn since the approval of ETFs on May 23.
Additionally, the supply shortage could be intensified by the increasing trend of staking. Currently, 25% of the ETH supply is staked. While ETF issuers are not directly involved in staking, the rising price could be beneficial for staking participants.
Integral emphasizes the merits of this development, stating that the approval of S-1 forms would increase institutional adoption of ETH and validate crypto as an asset class. Furthermore, the demand for ETH could lead to the emergence of an “altcoin season.”
BlackRock and Fidelity have experienced success with their IBIT and FBTC ETFs, respectively, recording significant inflows. BlackRock’s IBIT alone accounted for 26% of its $65 billion ETF inflows since the beginning of the year. Fidelity’s FBTC fund accounted for 56% of its $15.8 billion total ETF flows this year. It remains to be seen whether Ethereum will follow a similar trend as Bitcoin.
Currently, ETH is trading at $3,774, with a slight decline of 1% in the last 24 hours and 2% in the last seven days. However, the asset still has a positive gain of 21% in the last 30 days, with a 15.3% increase in its 24-hour trading volume.
Crypto analyst Michael van de Poppe believes that ETH is gaining momentum and is on track to reach a new all-time high price.