Matt Hogan, Bitwise's chief investment officer, predicted that the price of Ethereum (ETH) would soar to a record high when the Ethereum spot exchange-traded fund (ETF) is launched.
This outlook is due to the expected influx of significant capital into Ethereum due to the launch of ETFs.
What is the driving force behind Bitwise’s Ethereum $5,000 prediction?
Hogan's analysis suggests that while the first few weeks following the ETF's launch will be volatile, the overall trend will be strong upward momentum through the end of the year. His argument is based on the basic economic principles of supply and demand.
He explains that ETFs do not change the fundamental nature of the underlying assets, but introduce new sources of demand. When the Bitcoin (BTC) spot ETF was launched, demand significantly outstripped new supply from miners, driving up the price of Bitcoin.
“BTC has risen about 25% since the launch of the Bitcoin [exchange-traded product] ETP on January 11, and has risen more than 110% since its launch in October 2023. Will there be the same kind of impact on Ethereum? In fact, I think it could be bigger than that,” he said .
Read more: Ethereum ETF explained: What is an Ethereum ETF and how does it work?
Hogan estimates that the Ethereum ETF could attract more than $15 billion in new assets within the first 18 months when it launches. Given that Ethereum is currently trading at around $3,400, he believes there is a chance that Ethereum will challenge its previous all-time high and potentially surpass $5,000.
He also shows other key reasons for this optimistic outlook. These include Ethereum’s low short-term inflation rate, unforced selling behavior by Ethereum stakers, and a significant portion of Ethereum being staked or locked in smart contracts.
Bitwise's report reflects the previous outlook of Van Eck, another large asset management company. The company predicted that Ethereum would reach $22,000 by 2030 in its base case scenario. VanEck's confidence stems, among other things, from the expected approval of an Ethereum spot ETF.
Juan Pellicer, senior researcher at IntotheBlock, adds weight to these optimistic predictions from Bitwise and VanEck. He pointed out that after the launch of the Bitcoin spot ETF, the price of Bitcoin rose due to a surge in accumulation by large holders.
Pellicer expects Ethereum to be similarly affected, although he expects institutional demand for Ethereum to decline. However, on-chain data shows that large holders continue to grow.
“Over the past month, there has been a net outflow from large wallets in just two days, accumulating over 1.4 million Ethereum during this period,” he explained.
Read more: How to Invest in Ethereum ETF?
BeInCrypto reported that experts predicted that the U.S. Securities and Exchange Commission (SEC) could approve such an ETF sometime this week . However, Bloomberg ETF analyst Eric Balchunas said the SEC could approve the ETF by July 23 .
Despite the delay, the cryptocurrency community remains optimistic about approval. If the final offering documents meet the required conditions, major potential issuers could launch their ETFs simultaneously.
