Here’s How ETH Could Rise Above $5,000 By 2024 After Ethereum ETP Approvals: Bitwise CIO

Bitwise Asset Management’s chief investment officer has predicted that the introduction of Ethereum exchange-traded products (ETPs) will push ether (ETH) prices to new all-time highs above $5,000 by the end of the year.

The CIO suggests that ETP flows could have a bigger impact on Ethereum than on Bitcoin.

The Road to Ethereum’s New All-Time High

According to Matt Hougan, with ETPs projected to attract $15 billion in new assets over the next 18 months and ETH currently trading around $3,400, just 29% off its all-time high, the conditions are suitable for a rise in prices.

The expected price increase for Ethereum depends on the fundamental principles of supply and demand. While ETPs do not alter the underlying fundamentals of ETH, they do introduce new sources of demand. This dynamic was seen with BTC after the launch of spot Bitcoin ETFs in January.

Since then, these financial vehicles have achieved more than double the amount of Bitcoin that miners have produced, leading to a notable increase in price. Bitcoin is up about 25% since the launch of the ETP and more than 110% since the market started to consider the potential products in October 2023.

However, Matt cautioned that the first few weeks after the ETP launch could experience some volatility. This could happen because the $11 billion Grayscale Ethereum Trust (ETHE) is being switched to an ETP, which could lead to short-term selling. Despite this, the CIO is confident that ETH will hit new all-time highs by the end of the year, with even bigger gains possible if more money comes in than expected.

Ethereum ETP earnings could be bigger than Bitcoins

Several factors suggest that Ethereum could experience even higher gains from ETP inflows than Bitcoin. When Bitcoin ETPs were launched, the asset’s inflation rate stood at 1.7%, requiring $16 billion of annual BTC purchases to break even.

Ethereum’s inflation rate over the past year has been 0%, and the supply of ETH remained at 120 million. This balance is due to the consumption of ETH by various Ethereum-based applications, which balances the daily creation of new ETH. With new demand meeting zero new supply, the potential for price appreciation is high. Additionally, increased activity on the Ethereum network would further increase the organic demand for ETH.

Another advantage of Ethereum is its “proof-of-stake” consensus mechanism. Unlike Bitcoin miners, who often need to sell their newly mined BTC to cover operational costs, Ethereum participants do not face high direct costs and are not required to sell their rewards. This reduces the daily forced selling pressure on ETH, creating a more favorable supply-demand balance.

Currently, 28% of all ETH is staked and therefore locked in contracts for a certain period, making it unavailable for sale. An additional 13% is locked up in decentralized finance smart contracts, reducing the available supply. About 40% of ETH is effectively out of the market, which could amplify the impact of new demand from ETP flows.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!