The upcoming Ethereum spot ETF, how will Wall Street interpret it?

The Ethereum spot ETF is about to debut, and this historic moment is expected to bring another major victory to the cryptocurrency industry.

Wall Street has different predictions on how Ethereum will change after the listing of the ETF. According to foreign media reports, five Ethereum spot ETFs, including Fidelity, will be listed on Cboe on July 23.

Even before the U.S. Securities and Exchange Commission (SEC) approved these Ethereum spot ETFs in May, the optimistic sentiment surrounding their creation had already sparked bullish expectations for Ethereum.

Since March, Standard Chartered Bank predicts that Ethereum will reach $8,000 by the end of the year. The bank expects these funds to drive $15 billion to $45 billion into the Ethereum market within 12 months. As of last Friday, the Ethereum trading price was slightly below $3,500, indicating a potential increase of over 130%.

Bullish investors have gained confidence from the performance after the launch of the Bitcoin spot ETF. With funds pouring into these ETFs in early 2024, Bitcoin surged over 73%, reaching a historical high of $73,780 in March. However, there are differing opinions on whether Ethereum can replicate this momentum on Wall Street.

Nikolaos Panigirtzoglou of Morgan Stanley pointed out at the end of May that Ethereum spot ETFs may only attract a small portion of fund inflows.

Citigroup made a similar prediction this month, expecting that the fund inflow into Ethereum spot ETFs will only account for 30%-35% of the fund inflow into Bitcoin spot ETFs. This means that $4.7 billion to $5.4 billion will flow into Ethereum spot ETFs in the next 6 months.

Both banks provided some similar reasons for this. They pointed out the first-mover advantage of the Bitcoin spot ETF and emphasized that the functionalities provided by Ethereum will not be accessible through the ETF, thus limiting demand. For example, ETF investors will not have access to Ethereum staking, a feature where tokens are locked in exchange for rewards.

However, others believe these predictions are too pessimistic. At the end of June, Steno Research expects Ethereum to reach $6,500 this year driven by strong fund inflows.

Steno Research analysts stated, "The market's view on the upcoming Ethereum spot ETF is overly pessimistic. We expect net inflows in the first year to reach $15 billion to $20 billion as Ethereum has qualities that attract Wall Street." The company stated, "This should significantly boost its value, not only in dollar terms but also in Bitcoin terms."

Insiders also pointed out that compared to Bitcoin, Ethereum's liquidity is more restricted, partly due to yield restrictions. According to Galaxy Digital, this makes Ethereum more price-sensitive. In other words, even if the inflow is not as large as that of Bitcoin ETF, Ethereum may still achieve significant returns.

QCP Capital stated in mid-June: "Despite the uncertainty surrounding the popularity of Ethereum spot ETF, capturing 10-20% of the inflow of Bitcoin spot ETF funds could potentially drive Ethereum to break through $4000, approaching its peak of $4800."

Rachel Lin, CEO of SynFutures, predicts that supply considerations are one of the main reasons why Ethereum could soar to $22500 in this cycle. In a report from May, she outlined that Ethereum's supply has remained at 120 million since 2022, while Bitcoin's supply has been increasing.

However, some argue that regardless of how fund inflows and supply levels may impact Ethereum's price in the coming months, the direct impact of Ethereum spot ETF may disappoint investors.

Alex Kuptsikevich, Senior Market Analyst at FxPro, stated: "In the initial days, price fluctuations will be limited as funds will slowly shift from cryptocurrencies to ETFs rather than flowing in rapidly."

He added: "But from a broader perspective—this is the second cryptocurrency that can easily be added to investor portfolios. In the first few months after the launch of Ethereum spot ETF, the relative weight of Ethereum in traders' portfolios may increase."