Spot Ethereum ETFs are coming, but one analyst is warning investors to hold their horses. While everyone is excited about the potential for these ETFs to boost ETH prices, there’s a hidden danger lurking: a surge in ETH supply.
The Supply Problem
Crypto expert Benjamin Cohen has pointed out that ETH supply is increasing rapidly, turning the coin inflationary again. Remember the Ethereum Merge? That made ETH deflationary, burning coins through transaction fees. But lately, activity on the Ethereum network has been low, meaning fewer fees are being burned.
Cohen says the supply has increased by a whopping 60,000 ETH in just one month! If this keeps up, the supply could be back to pre-Merge levels by December.
What This Means for ETH Prices
This new supply could offset the positive impact of Spot Ethereum ETFs, potentially pushing ETH prices down instead of up.
Think of it this way: Imagine a pool filled with water (ETH). Spot ETFs are like pouring more water into the pool (more demand). But if the pool is leaking (increasing supply), the water level might not rise as much as you’d expect.
Spot ETF Hype
Despite the potential for a supply-driven crash, many are still bullish about Spot Ethereum ETFs. These funds, like Fidelity’s FETH and VanEck’s ETHV, are set to launch on July 23rd. They’re already competing with each other on fees, with Franklin Templeton offering a low 0.19% fee.
Bitwise CIO Matt Hougan predicts these funds could attract up to $15 billion in investments within two years.
The bottom line? While Spot Ethereum ETFs are exciting, it’s important to remember that the market is complex. Don’t get caught up in the hype without considering all the factors, including the potential for a supply-driven price drop. /p>
