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According to crypto expert and Into The Cryptoverse creator Benjamin Cowen, Ethereum’s price may suffer if its supply keeps increasing at the present pace as the early excitement around spot Ethereum exchange-traded funds (ETF) diminishes.
Cowen said in a July 19 post on X, referring to the September 2022 Merge, which turned Ethereum to its present proof-of-stake consensus model, “If the supply of ETH keeps increasing by ~60k/month like it has been since April, then by Dec the supply will be back to what it was at the merge.”
Ethereum becomes deflationary after the Merge; its supply dropped by around 455,000 ETH by April 2024. Still, the supply has lately grown by about 150,000 ETH. Cowen projects that by December Ethereum’s supply will return to pre-Merge levels if current trend continues.
Potential Price Effect
Cowen speculates that the novelty of spot ETH ETFs might fade, maybe resulting in a price drop. “If it follows 2016, then ETH/BTC final capitulation will not start until September 2024, which would be plenty time for the novelty of the spot ETF relative to BTC to possibly wear off,” he said.
Cowen cautions of a “decent chance” of a drop during the next “3-6 months,” even while Ether’s price will probably be greater in 1.5 years. CoinMarketCap data shows Ether trading at $3,506 at the time of publishing.
Supply Crisis and Onchain Analysis
Additionally drawing attention to a possible “supply crisis” for Ethereum is onchain expert Leon Waidmann. Waidmann said in a July 16 article, “Exchange balances down to 10.2% while 39.3% of ETH is locked in smart contracts” therefore highlighting a limited supply issue that many investors may not completely understand.
Upcoming Spot Ethereum ETFs
Notwithstanding these issues, five spot Ethereum ETFs are scheduled to start trading on the Chicago Board Options Exchange on July 23, subject to regulatory clearance. Approved rule amendments allowing the filing of several spot Ether ETFs on May 23 by the United States Securities and Exchange Commission (SEC)
Among the ETFs slated for introduction are the 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.
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