Citi Predicts $5.4B Ethereum ETFs Inflows In Just Six Months

As spot Ethereum ETFs debut on US exchanges, Citi predicts substantial inflows over the next six months, while analysts project a rally to a new all-time high for Ethereum. According to a recent CNBC report, Citi expects potential inflows of up to $5.4 billion for these ETFs in the coming half-year, signaling growing interest in regulated crypto investment vehicles.

This launch follows the earlier debut of spot Bitcoin ETFs, which saw around $17 billion in inflows within six months.

Ethereum’s Price Rally: $5,000 in Sight?

Analysts predict Ethereum could reach the $5,000 mark this year as institutional money begins to flow in. Currently, amid the debut of spot Ethereum ETFs, ETH trades around $3,450, down over 1% in the past 24 hours.

Bitwise Chief Investment Officer Matt Hougan has stated that while US spot Ether ETFs may have a rough start, they could have a more significant impact on the asset’s price than Bitcoin ETFs had on BTC. Hougan mentioned that the first few weeks might be choppy due to money flowing out of the $11 billion Grayscale Ethereum Trust (ETHE) as it converts to an ETF. However, he is confident that new highs will be reached by the year’s end.

The Impact of Spot Ethereum ETFs

Bitwise emphasizes that the money flowing into new ether spot ETFs will have a larger impact than it did for Bitcoin for three structural reasons:

1. Zero Inflation: Ether’s short-term inflation rate is 0%, compared to Bitcoin’s 1.7% when its versions launched, leading to significant demand meeting zero supply.
2. Staking vs. Mining: Unlike Bitcoin miners, ETH stakers don’t have to sell, and with 28% of ETH staked, it’s effectively off the market.
3. Expected Inflows: Ether spot ETFs are expected to garner $15 billion of net inflows in their first 18 months of trading.

Challenges Ahead

While Hougan is optimistic about Ethereum reaching $5,000 and beyond by year’s end, futures traders are betting on a near-term decline in Ethereum’s price. Moreover, the SEC’s position on not allowing staked Ether within ETFs poses a potential headwind for adoption. Historically, approvals relied on the jurisdictional hook of futures trading, which, according to CNBC, Ethereum and Bitcoin lack.

The debut of spot Ethereum ETFs marks a significant milestone for the crypto market, with potential substantial inflows and price rallies on the horizon. However, the market will need to navigate initial volatility and regulatory challenges to achieve these optimistic projections.

Will Ethereum truly outshine Bitcoin in the ETF market? Let us know your take.