- • Matt Hougan, chief investment officer at Bitwise Asset Management, predicts that the price of Ethereum could surge past $5,000 following the launch of Ethereum ETFs.
- • Hougan believes that ETF inflows will significantly impact Ethereum’s price by creating new sources of demand, similar to what was observed with Bitcoin after its funds launched.
- • Hougan cites Ethereum’s low inflation rate, the substantial portion of ETH that is staked or locked in DeFi contracts, and the lack of forced selling pressure from stakers as key reasons why Ethereum might see an even greater impact from ETF inflows than Bitcoin.
Matt Hougan, chief investment officer at Bitwise Asset Management, predicted on Wednesday that the price of Ethereum could surge past $5,000 following the launch of Ethereum ETFs. His prediction is based on the belief that ETF inflows will have a major impact on Ethereum’s price by creating new demand.
Hougan’s Analysis
Hougan explained that ETFs introduce new demand without changing Ethereum’s supply fundamentals. He pointed to three key reasons why Ethereum may see a greater price impact from ETF inflows than Bitcoin:
- Ethereum’s low inflation rate. Ethereum’s inflation rate has been 0% over the past year, meaning its supply has remained constant at 120 million. This contrasts with Bitcoin’s 17% inflation rate when its ETFs launched.
- Staking dynamics. 28% of ETH is staked, meaning it’s off the market. There is less forced selling pressure in Ethereum than Bitcoin.
- ETH locked in DeFi. A substantial portion of ETH is locked in decentralized finance contracts, further reducing selling pressure.
Anticipated Impact
Hougan expects Ethereum ETFs to attract $15 billion in new assets over 18 months. This significant influx could drive ETH from around $3,400 today to over $5,000, surpassing its previous all-time high.
Conclusion
Given ETH is currently trading around $3,400, Hougan concluded that the introduction of ETFs and resulting demand dynamics make it likely that Ethereum will challenge and surpass its previous record highs.
