ETH Supply to Drop By 1.26 Million In Five Months of Spot Ethereum ETF Launch
Currently, all eyes are on the SEC’s decision for the approval of the spot Ethereum ETF S-1 registrations that could serve as a catalyst for the broader market rally. As per the latest report from K33 Research, Ethereum could be heading for a supply shock with nearly 1.26 million ETH ready to move off exchanges within just five months of the ETF launch. This could provide a major boost to the Ether (ETH) price making way for hitting a new all-time high.
Spot Ethereum ETFs to See $4 Billion in Inflows
As per the K33 Research, the spot Ethereum ETFs could see a staggering $4 billion in inflows within just the first five months of launch. K33 Research based its forecast by comparing the assets under management (AUM) in existing Ethereum (ETH)-based exchange-traded products worldwide to similar Bitcoin (BTC) products. They also analyzed the open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a key marketplace for institutional investors.
As of now, Ether’s open interest (OI) on the CME exchange stands at 23% of the size of Bitcoin futures. However, ever since the ETH futures started trading on CME back in 2021, they have grabbed a 35% share of the BTC futures, indicating that there’s been a strong institutional demand for ETH.
While comparing these ratios along with the $14 billion in inflows for the spot Bitcoin ETFs, K33 Research predicts that the spot Ether ETFs could see inflows anywhere between $3 billion and $4.8 billion within the first five months of launch.
As per the current ETH price of $3,800, this could mean that 800,000 to 1.26 million of ETH accumulation will happen through the ETFs. This is nearly 0.7%-1.05% of the total circulating ETH supply.
ETH to Outperform Bitcoin
Soon after the spot Bitcoin ETF approval, the BTC price rallied by 60% to record highs. As per K33 Research, if the Ethereum ETFs go live for trading, Ethereum will start outperforming BTC, after nearly two years of underperformance.
More importantly, in its research report, it noted that the removal of the staking feature from ETFs won’t negatively impact the inflows into the investment product. K33 noted that in Canadian ETH ETFs, 99% of assets under management are housed in funds that do not involve staking, while in European products, the figure stands at 98%.
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