ETH Price Could Crash Despite Spot Ethereum ETFs Euphoria, Analyst Explains Why

Mila July 23, 2024

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With the Spot Ethereum ETFs expected to begin trading on Tuesday, July 23, expectations for the ETH price have shot up drastically. Numerous analysts and market experts have come forward to predict that it would be a great development for the ETH price, pushing it to new all-time highs. However, one analyst has warned investors to exercise caution during this time as the Spot Ethereum ETFs going live may not have the expected effect immediately.

Why The Spot Ethereum ETFs May Lead To A Decline

While the Spot Ethereum ETFs going live for trading have been well-received by the crypto community, crypto expert Benjamin Cohen has pointed out another alarming development that could send the ETH price crashing. This time, it is the ETH supply increasing rapidly.

In the X (formerly Twitter) post, Cohen points out that the ETH supply had turned inflationary once again. For reference, the Ethereum Merge previously made the ETH supply deflationary, with burns from transactions sending hundreds of thousands of ETH to the dead wallet.

However, recently, with activity falling to new lows on the Ethereum network, the supply has turned inflationary as there isn’t enough transaction fees being burned to outpace new supply. More specifically, the crypto expert revealed that the supply had gone up by 60,000 ETH in just one month.

Now, if the supply continues to increase at this rate, Cohen explains that it will take only until December for the supply to get back to where it was before the Merge was completed. Unless there is a reversal and the supply turns deflationary once again, this new supply could undermine the inflows from Spot Ethereum ETFs and push the ETH price down instead.

Spot ETH ETFs Trading Draws Closer

Last week, the Chicago Board Options Exchange (CBOE) announced that a total of five Spot Ethereum ETFs will go live for trading on July 23, 2024. These funds include Fidelity (FETH), VanEck (ETHV), 21Shares (CETH), Invesco (QETH), and Franklin Templeton (EZET), all of which will be vying for the top spot.

So far, there has been a fee battle, with each fund trying to outdo the other with lower fees. For example, the Franklin Templeton fund is offering a low fee of 0.19%, beating out Bitwise and VanEck’s 0.2% and coming ahead of BlackRock, Fidelity, and Invesco Galaxy, which have set their fund fees at 0.25%.

Like many others, the Bitwise CIO Matt Hougan, has expressed optimism as Spot Ethereum ETFs are set to begin trading. Hougan predicts that these funds could see up to $15 billion in inflows in less than two years after they launched.