- Ethereum (ETH) prices are predicted to dip following the initial excitement over the launch of spot Ethereum exchange-traded funds (ETFs) in the U.S.
- Noted financial analyst Benjamin Cowen projects a price regression to pre-The Merge levels of September 2022 if Ethereum’s supply continues its current growth trend.
- Cowen highlights that Ethereum’s escalating supply has the potential to influence its market value significantly.
Discover why Ethereum’s spot ETFs may not sustain their initial excitement as supply dynamics threaten to lower prices to pre-The Merge levels.
Ethereum Prices: A Potential Return to Pre-Merge Levels
On July 19, Benjamin Cowen elucidated that the supply of Ethereum has been rising by approximately 60,000 ETH each month since April. He speculates that if this pattern persists, the supply could revert to levels observed before The Merge by December. The Merge was originally forecasted to induce a deflationary shift, trimming the supply by an estimated 455,000 ETH by April 2024. However, a recent surge of around 15,000 ETH has altered this expectation significantly. Cowen pointed out that sustained increases in supply could exert downward pressure on Ethereum’s price in the approaching months. He also drew historical analogies to 2016, implying that a notable depreciation of the ETH/BTC trading pair might commence by September 2024. Such an outcome could undermine the allure of spot Ethereum ETFs, especially in contrast to their Bitcoin counterparts.
The Impact of Ethereum’s Exchange Supply on Prices
On-chain analyst Leon Waidmann has identified a critical supply issue confronting Ethereum. In a recent analysis, dated July 16, he highlighted that the percentage of ETH available on cryptocurrency exchanges has plummeted to 10.2%, whilst 39.3% of ETH remains locked within smart contracts. Waidmann suggests that many investors are oblivious to this restricted circulating supply of ETH, which he interprets as an optimistic sign for the leading altcoin. The constrained availability could potentially buoy Ethereum’s price in the short term, although it’s imperative to consider the combined impact of increasing supply and market dynamics on future valuations.
Conclusion
The analyses provided by Cowen and Waidmann collectively indicate that while the initial introduction of spot Ethereum ETFs might spur temporary price upsurges, underlying factors such as a ballooning supply and evolving market conditions could precipitate price adjustments in the long term. Investors would do well to stay vigilant and informed about these ongoing trends, as they are likely to shape the future trajectory of Ethereum prices. By monitoring these aspects, stakeholders can make better-informed decisions, ensuring they navigate the volatile cryptocurrency markets with greater agility and insight.
