How will the Ethereum spot ETF perform in the future?

Vitalik Buterin once described Bitcoin as a pocket calculator, while Ethereum is a smartphone. Now, this smartphone is about to be recognized by the sovereign government of the United States.

On May 24th, Beijing time, the Ethereum spot ETF was officially approved, becoming another cryptocurrency fund product officially recognized by the US SEC after Bitcoin. This is not only a glorious moment for Ethereum, the "king of all chains", but also a major positive for the crypto market.

Looking back at the development of this incident, it was unexpected. Before May 21, the probability of Ethereum spot ETF approval was only 25%, but with the revelation of Bloomberg analyst Eric Balchunas, the SEC's attitude may have changed 180 degrees for political reasons, and this number soared to 75%. The SEC also required several applicants to urgently submit 19b-4 amendment documents.

Now that the dust has settled and the crypto market is in a frenzy, we might as well look back at the development history of Ethereum and sort out the forecasts of multiple institutions and professionals to get a general understanding of ETH's future trends.

1. Common knowledge about Ethereum

Ethereum is a decentralized, open-source public blockchain platform with smart contract functions. Ether (ETH) is the native cryptocurrency of Ethereum. Ethereum is the second-highest cryptocurrency in the crypto market, second only to Bitcoin. Ethereum is also the most used blockchain by users.

Inspired by Bitcoin, programmer Vitalik Buterin first proposed the concept of Ethereum between 2013 and 2014, which roughly means "the next generation of cryptocurrency and decentralized application platform". He also introduced Ethereum for the first time in a white paper published in 2013. Buterin and other co-founders launched the Ethereum blockchain through online crowdfunding in the summer of 2014 and officially launched it on July 30, 2015.

Ethereum's main innovation is that it has designed a platform that can execute smart contracts using blockchain, thereby further strengthening the technical advantages of existing smart contracts. In addition to smart contracts, Ethereum's blockchain can host other cryptocurrencies by using its ERC-20 compatible standard.

Ethereum's goal is to become a global decentralized application platform that allows users around the world to write and run software without being subject to censorship, downtime, or fraud.

In 2022, Ethereum transitioned its consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS), a move that reduced Ethereum’s energy usage by 99%. At the same time, the name of this transition was changed from “Ethereum 2.0” to “Merge”.

Since the release of the white paper in 2013, a total of 25 milestone events have occurred, most of which are fork upgrades, 12 of which are relatively important, the most recent of which is the Cancun upgrade.

2. Ethereum Spot ETF

An Ethereum ETF is a financial product designed to track the price of Ethereum, enabling investors to buy and sell shares on traditional stock exchanges. This regulated investment avenue provides investors with a convenient way to participate in the cryptocurrency market without having to directly manage digital assets.

Ethereum ETFs operate within the regulatory framework of traditional financial markets. This regulatory oversight enhances investor confidence and ensures compliance with established financial standards. At the same time, ETFs replicate the performance of Ethereum and provide scalability for its value without involving the complexity of ownership.

In addition to easy access, Ethereum ETFs offer the benefits of regulatory oversight, trading convenience, and a diversified portfolio. These funds trade on major stock exchanges, providing liquidity and simplicity for investors who may be new to the cryptocurrency market.

Companies currently applying for Ethereum spot ETFs include VanEck, 21Shares & ARK, Hashdex, Grayscale, Invesco & Galaxy, Fidelity, BlackRock, Franklin, and Bitwise.

Variant Fund Chief Legal Officer: If the SEC approves the Ethereum spot ETF, it means that it recognizes that non-pledged ETH is not a security. The agency has previously refused to recognize any asset other than Bitcoin as a non-securities commodity.

3. Impact of the event: ETH hits new highs in multiple data

On May 23, Grayscale Ethereum Trust (ETHE) had a trading volume of $687 million on the 21st, reaching a new high of $680 million since May 2021. The previous high was $842 million on May 19, 2021.

Data on May 22:

Matrixport said in a statement that Ethereum set the largest single-day volatility record in history due to the approval of the Ethereum spot ETF. On the same day, the EthVol (Ethereum volatility) index launched by financial index company T3 Index and options trading platform LedgerX rose to 81.14, close to the highest level of 86.7 in a year, with a daily increase of 12.07%.

ETH's previous largest fluctuations were concentrated in May 2021, when DeFi trading volume was close to its peak. The two major fluctuations so far in 2024 were mainly policy-driven and related to SEC and FOMC meetings.

The Ethereum futures ETF generated $47.75 million in trading volume , 40% higher than the peak of $34.18 million set on March 5 when Ethereum approached the $4,000 mark.

The total open interest of Ethereum futures contracts across the entire network reached US$15.6 billion, setting a new historical high.

The number of small Ethereum wallets holding up to 10 ETH reached 121 million, a record high.

Hong Kong's three spot Ethereum ETFs soared collectively, with net inflows exceeding HK$5 million as of noon on May 22, the largest net inflow since their launch.

4. Historical Trends of ETH Price

Before January 2017, the price of ETH was mostly below $10. It continued to rise over the following year, eventually reaching its first historical high of about $1,300 in mid-January 2018 , an increase of about 13,000%.

From January 2018 to July 2020, ETH entered a long ice age, with the price of the currency falling to around US$110, a drop of 91.5%.

However, with the massive money injection by the Federal Reserve, the crypto bull market is coming. Starting in the summer of 2020, ETH entered a soaring mode. It hit record highs in May and November 2021 , reaching as high as $4,810. If calculated based on the previous low point, the increase is as high as 4,272%.

Since then, the bull market has turned into a bear market, with ETH falling to as low as $881, a drop of 81.68%. The bear market lasted for two years, from November 2021 to October 2023.

With the approval of the Bitcoin spot ETF, the crypto market has gradually entered a bull market, and ETH has also ushered in a warm spring, with the price rising to as high as $3,800, an increase of about 322.2%. However, compared with the growth of other blue-chip currencies, ETH's performance is at the bottom.

5. Market Forecast: Generally expected to exceed US$5,000

Standard Chartered Bank : Ethereum's year-end target price is $ 8,000 , and the price of Ethereum will reach $ 14,000 by the end of 2025. Geoff Kendrick, head of foreign exchange research and digital asset research at Standard Chartered Bank, said that it is expected that the Ethereum spot ETF will drive an inflow of 2.39 to 9.15 million Ethereum in the first 12 months after approval. In US dollars, it is equivalent to approximately $15 billion to $45 billion.

Bernstein : Approval of a spot Ethereum ETF will drive its price up 75% to $6,600. Bernstein analysts estimate that the SEC approved a similar Bitcoin product in January, stimulating a 75% increase in Bitcoin prices in the following weeks, and ETH's price trend is expected to be similar.

Lyra : There is a 20% probability that Ethereum will break through $ 5,000 by the end of June. Nick Forster, founder of Lyra and former Wall Street options trader, said that according to the Lyra options market, the probability of Ethereum reaching $5,000 before June 28 is about 20%, and the probability of exceeding $ 5,500 before July 26 is also 20%.

ZhuSu : If the Ethereum spot ETF is approved, Ethereum will rise to US$5,400.

QCP Capital : If the approval of BTC ETF is any guide, ETH may rise by 60% if ETH ETF is approved. ETH's short-term target is $4,000 and it will reach $5,000 later this year.

Coinbase : Ethereum could see an unexpected upside in the coming months. Ethereum has lagged behind the broader cryptocurrency market this year, but its long-term positioning remains strong and could see an unexpected upside.

Bloomberg : Ethereum ETF is the biggest boost to the crypto market since 2022.

ConsenSys CEO : If the Ethereum spot ETF is approved, the resulting "flood of demand" for Ethereum may lead to supply tightness, thereby pushing up the price of Ether .

The CEO explained that institutions that have already been exposed to Bitcoin through the newly launched Bitcoin ETF "will most likely want to diversify their investments into a second approved ETF," and that the natural, pent-up demand to purchase Ether through the ETF will be considerable, but the supply to meet that demand will be less than when the Bitcoin spot ETF was approved in January of this year.

Bybit Financial Product Director: The market still underestimates the potential of Ethereum. ETH is still the most decentralized, tested and technically outstanding work ever. I hope Ethereum can get a proper valuation.

JMP Securities: Coinbase would benefit from an Ethereum ETF.

Other views:

Bloomberg ETF analyst : Ethereum ETF may only account for 15% of Bitcoin ETF assets.

Economist Peter Schiff: It is expected that funds will shift from Bitcoin ETF to Ethereum ETF after the US SEC's approval, which may have a negative impact on spot Bitcoin ETF and Bitcoin.

Kryptanium Capital: If the Ethereum ETF is approved, the best trading strategy is to buy SOL/ETH.

Summarize

ETH is the second largest cryptocurrency by market capitalization, second only to Bitcoin (BTC). However, there is a huge gap between the two in terms of financial value attributes, whether in the evaluation of traditional financial institutions or crypto institutions. The SEC's approval of the Ethereum spot ETF is undoubtedly an affirmation and recognition of ETH.

Judging from the above ETH price trend, its price increase trend is gradually declining. However, with the approval of ETF, Ethereum has become a hot commodity in the eyes of many investors, and they have predicted new historical highs. Whether Ethereum can become the "next generation of cryptocurrency and decentralized application platform" is left to the market and time to test.