- Analysts claim that an “approved” ETH ETF could attract inflows from US spot BTC ETFs.
- Another analyst argues that the ETH ETF may not experience outflows like the one with GBTC.
Quinn Thompson, cryptocurrency analyst and founder of Wrecker Capital, said: Ethereum [ETH] vastly underestimated Bitcoin [BTC].
Thompson said, citing recent updates on possible ETH ETF approval and expected capital inflows. claimed,
“This suggests that ETHBTC at 0.05 is still undervalued, especially considering we are in a bull market.”
The ETHBTC ratio tracks the performance of ETH in terms of BTC. An increase in value indicates that ETH is outperforming BTC. However, a decline in this ratio means that BTC is outperforming ETH on the price chart.
The ETHBTC ratio fell to a low of 0.45 on May 16th. However, following the recent update on ETH ETF approval, it has since recovered to levels above 0.50.
Will ETFs drive up ETH price?
Thompson argued that the lack of ETFs means ETH is not attracting enough flows, and the market is becoming obsessed with BTC and Bitcoin. Solana [SOL].
“The reason ETH has been the ugly middle child between BTC and SOL for the last 6 months is because it has had no inflows from ETFs.”
However, market watchers have mixed opinions on whether the ETH ETF will follow in the footsteps of the BTC ETF.
Since GBTC was converted into an ETF in January, it has recorded cumulative outflows of approximately $17 billion as of May 21.
Will Grayscale’s Ethereum Trust (ETHE) face a similar fate, hurting ETH’s upside potential?
Crypto analyst James Van Straten was conflicted about the possible outcome.
Straten instead mentioned The proposed Grayscale Mini Trust (ETH) is believed to have the potential to alleviate issues such as fees that led to the mass outflow of GBTC.
“A mini-trust $ETH could be launched at the same time with fewer fees and investors would not need to do anything, but this was not available with $GBTC.”
The proposed mini-trust would be a spin-off from the Grayscale Ethereum Trust (ETHE).
Interestingly, Thompson predicted that in the first four months after “approval,” ETH could collect around 9% of inflows from spot BTC ETFs.
If confirmed, the ETHBTC ratio could rise from its current 0.53, leading to an increase in ETH value.
Standard Chartered executives expressed a similar bullish stance on ETH post-ETF.
Jeff Kendrick, head of digital asset research at Standard Chartered, claimed in an interview with The Block that the ETH ETF could be approved this week.
Kendrick argued that ETH could hit $8,000 by the end of the year, adding that the ETH ETF could see inflows of “roughly $15 billion to $45 billion” in the first 12 months.
However, it remains to be seen whether ETH will outperform BTC after the ETF is launched. Meanwhile, the market will focus on the SEC's May 23 decision regarding VanEck's ETH ETF application.
