Ether prices may decline after initial ETF excitement fades due to increasing supply, warns crypto analyst Benjamin Cowen.
Ethereum's price might face downward pressure once the initial excitement surrounding the launch of spot Ethereum exchange-traded funds (ETFs) subsides. According to crypto analyst Benjamin Cowen, if the current trend of increasing ETH supply continues, it could significantly impact the cryptocurrency's market dynamics.
Key Points:
Current Supply Trend:
Since April 2024, Ethereum's supply has increased by approximately 150,000 ETH.
Cowen warns that if this trend persists, supply levels could revert to pre-merge levels by December 2024.
Potential Price Impact:
The novelty of spot Ethereum ETFs may wear off, leading to potential price declines.
Cowen suggests a possible decline within the next 3-6 months, despite a longer-term bullish outlook.
Comparative Analysis:
Drawing parallels to 2016, Cowen indicates that the final capitulation for ETH/BTC might occur around September 2024.
This timeline aligns with the anticipated reduction in ETF-related excitement.
Supply Constraints:
Onchain analyst Leon Waidmann highlights a "supply crisis" due to low exchange balances and significant ETH locked in smart contracts.
Current exchange balances are down to 10.2%, with 39.3% of ETH locked in smart contracts, indicating tight supply.
Upcoming ETF Launch:
Five-spot Ethereum ETFs are set to begin trading on the Chicago Board Options Exchange on July 23, pending regulatory approval.
These ETFs include the 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.
While the launch of spot Ethereum ETFs marks a significant milestone for the cryptocurrency, the increasing supply of ETH could dampen price gains once the initial excitement fades. Analysts suggest monitoring supply trends closely, as they will play a crucial role in shaping Ethereum's market dynamics in the coming months.
Source: Cointelegraph
Comments