ETH Supply Will Drop by 1.26 Million in Five Months of Spot Ethereum ETF Launch
All eyes are now on the SEC’s decision to approve the spot Ethereum ETF S-1 registrations, which could serve as a catalyst for the broader market rally. According to the latest report from K33 Research, Ethereum may be heading for a supply shock, with approximately 1.26 million ETH ready to exit exchanges in just five months after the ETF launch. This could lead to a massive increase in the price of Ether (ETH) reaching a new all-time high.
Spot Ethereum ETFs Will See $4 Trillion in Inflows
According to K33 Research, spot Ethereum ETFs could see a staggering $4 billion in inflows in the first five months after launch. K33 Research based its prediction by comparing assets under management (AUM) in existing Ethereum (ETH)-based exchange-traded products worldwide to similar Bitcoin (BTC) products. They also analyzed open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a major 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, since ETH futures began trading on CME in 2021, they have captured 35% of BTC futures, indicating strong institutional demand for ETH.
Courtesy: K33 Research
K33 Research compares these rates to the $14 billion in inflows into spot Bitcoin ETFs, predicting that spot Ether ETFs could see inflows of $3 billion to $4.8 billion in the first five months of launch.
Based on the current ETH price of $3,800, this could mean accumulation of 800,000 to 1.26 million ETH through ETFs. This amounts to approximately 0.7% to 1.05% of the total ETH supply in circulation.
ETH Will Outperform Bitcoin
Shortly after the spot Bitcoin ETF approval, the BTC price increased by 60%, reaching record levels. According to K33 Research, if Ethereum ETFs open for trading, Ethereum will begin to outperform BTC after nearly two years of underperformance.
More importantly, the research report noted that removing the staking feature from ETFs will not negatively affect inflows to the investment product. K33 noted that 99% of assets under management in Canadian ETH ETFs are housed in non-staking funds, while for European products the figure is 98%.
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Bhushan is a FinTech enthusiast and has a good ability to understand financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is in a constant learning process and motivates himself by sharing the knowledge he has acquired. In her spare time, she reads thriller novels and sometimes explores her culinary skills.
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