SCRYPT CEO Norman Wooding told crypto.news that several factors indicate that Ethereum prices would rise if the SEC approves a spot Ethereum ETF.
Wooding predicted that a spot Ethereum (ETH) ETF would follow the pattern of a spot Bitcoin (BTC) fund and push the ETH price above $4,000. Experts say the approval of a spot ETH ETF would ease “lingering fears” surrounding the second-largest cryptocurrency and boost market demand.
Wooding opined that if the Spot ETH ETF captures 10-20% of the Bitcoin ETF's inflows, Ethereum could retest its all-time high of $4,800.
“This will open the door to a previously untapped user base, increasing demand and creating an upward trajectory for the price in the days, weeks and months following approval,” SCRYPT’s CEO told crypto.news.
Grayscale's proprietary Spot Bitcoin ETF attracted more than $35 billion in assets under management (AUM) within six months of starting trading. Wooding's estimate is in line with a report from Gemini crypto exchange, which said the Spot ETH fund could see net inflows of $5 billion over the same six-month period.
High profits without staking
Just as observers believe a spot ETH ETF is a matter of when, not if, skeptics have also debated why Ethereum should have an institutional wrapper that tracks spot Ether prices.
While Bitcoin is primarily used as digital gold and a store of value, Ethereum functions as a smart contract-powered ecosystem for decentralized applications, a market that relies heavily on Ether as liquidity and an economic instrument.
But as the ETF holds assets and waits for prices to rise, it could leave large amounts of Ether lying dormant.The problem is exacerbated by the lack of staking activity in the proposed spot ETH fund.Carlos Mercado, a data scientist at Flipside Crypto, said this isn't the best use case for Ether, but Wooding argues that the outcome could be positive for ETH proponents.
According to Wooding, reduced liquidity and ETH dormancy could encourage more direct Ether staking, which could boost on-chain yields as spot ETFs acquire large amounts of supply.
“While dormant ETH from ETFs may reduce liquidity in DeFi, increased exposure and participation in the broader market may ultimately encourage staking and more direct engagement in DeFi, offsetting the initial impact,” Wooding told crypto.news in an email.
When will a spot Ethereum ETF appear?
After the U.S. Securities and Exchange Commission (SEC) issued initial approval for a spot ETH ETF last month, issuers and experts expect the final go-ahead by the end of the third quarter of 2024. Bloomberg analyst James Seifert suggested regulatory approval could come as soon as this month, while SEC Chairman Gary Gensler has told lawmakers to expect an outcome by the end of the summer.
There has been speculation that the SEC may reject the issuer following its lawsuit over Consenese’s MetaMask wallet and staking offering, but Wooding is confident that regulators will approve the spot ETH ETF this month.
According to Wooding, rejecting the Ethereum funds could undermine the SEC's credibility and competence. The SCRYPT CEO added that the rejection could also spur further regulatory discussion, leading to better, more sophisticated future proposals.
Additionally, if the SEC were to reject a spot Ethereum ETF, the price of Ethereum could fall. However, Woodings speculates that such an outcome is unlikely, and that in any case, any market decline would be short-lived. “Ethereum's fundamental value and utility remain strong, and the market is likely to stabilize as investors refocus on technology developments and applications,” Wooding says.
