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Ethereum's price is expected to be "sensitive" to ETF inflows in the coming days, with Kaiko highlighting potential impacts from Grayscale's Ethereum Trust withdrawals.
Market Analysts Eye Ethereum's Sensitivity
According to crypto analytics firm Kaiko, investors will likely remember the underwhelming demand for ETH futures products late last year, which means that the price of Ether will likely be "sensitive" to spot Ether ETF inflows in the coming days.
"The launch of the futures-based ETH ETFs in the US late last year was met with underwhelming demand, all eyes are on the spot ETFs’ launch with high hopes on quick asset accumulation," stated Will Cai, head of indices at Kaiko, in a market analysis dated July 22.
"Although a full demand picture may not emerge for several months, ETH price could be sensitive to inflow numbers of the first days."
The final approval was given to many spot Ether ETFs on July 22, and they are currently scheduled to begin trading on July 23.
Potential Withdrawals from Grayscale's Trust
According to Cai, "potential" withdrawals from Grayscale's Ethereum Trust (ETHE) are anticipated to have one of the most noticeable effects on pricing.
A fund that gives institutional investors exposure to Ethereum (ETH), similar to what Grayscale Bitcoin Trust (GBTC) did for Bitcoin, is ETHE. Nevertheless, its shares are subject to a six-month lock-up period.
Cointelegraph reports that many ETHE shareholders will likely seek to unload their shares after July 23, when the company transforms into a spot ETF, and traders will have easier access to buying and selling.
In his analysis, Cai noted that "ETHE’s discount to net asset value closed over the past few weeks, after widening between February and May as hopes of approval waned."
"The narrowing discount suggests traders bought ETHE below par and will redeem these shares at NAV price on conversion to realize profits."
A lot of people aren't sure if Ether ETFs will be as big of a hit as spot Bitcoin ETFs were in the months after they were out.
Wintermute, a cryptocurrency market maker, said in a research paper published on July 21 that Ethereum ETFs would attract $3.2 billion to $4 billion in their first year of trading.
Predictions for Ethereum ETFs
With a target range of $3.2 to $4 billion, Wintermute predicted that demand for exchange-traded funds (ETFs) would be lower than expected.
Meanwhile, by year's end, the firm projects that Bitcoin ETFs would amass almost $32 billion in assets. Thus, according to Wintermute, the entire first-year inflows into the ETH ETF will be approximately 10 to 12% of the Bitcoin ETF flows.
Market Sentiment and Predictions
In light of this, the market maker predicts that by year's end, the price of ETH will have increased by no more than 24%.
A more optimistic prediction came from boutique crypto asset firm ASXN in a post on X on July 22. They predicted that ETH ETFs would receive an average monthly inflow of $800 million to $1.2 billion.
Additionally, ASXN anticipates that the price impact of ETHE withdrawals will be dampened by the debut of Grayscale's small ETH ETF, which will reduce outflow pressure and a tightening and dynamic discount premium to net asset value (NAV).
An upside surprise could happen, according to AXN, because of the special dynamics of ETHE trading at par before the launch and the tiny trust.
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