SCRYPT CEO Norman Wooding suggests that Ethereum prices could rise significantly if the SEC approves spot Ether ETFs.

Wooding believes that spot Ethereum (ETH) ETFs will mirror the performance of spot Bitcoin (BTC) funds, potentially pushing ETH prices above $4,000. According to him, approval of spot ETH ETFs will alleviate concerns surrounding the second-largest cryptocurrency and drive market demand.

Wooding noted that if spot ETH ETFs capture 10-20% of Bitcoin ETF flows, Ether could retest its $4,800 peak.

“This opens doors to a previously untapped audience, thus increasing demand, generating an upward price trajectory in the days, weeks, and months following approval,”

Grayscale’s spot Bitcoin ETFs managed to garner over $35 billion in assets under management (AUM) within six months of trading. Wooding’s estimations align with a report suggesting that spot ETH funds could see $5 billion in net inflows over the same period.

Although some experts view spot ETH ETFs as inevitable, skeptics question the need for an institutional wrapper that tracks spot Ether prices. Bitcoin is often seen as digital gold and a store of value, while Ethereum operates as a smart contract-powered ecosystem for decentralized applications, relying heavily on Ether as a liquid asset.

ETFs typically hold assets and wait for higher prices, which could lead to significant amounts of dormant Ether. This issue is compounded by the lack of staking activity in proposed spot ETH funds. Flipside Crypto data scientist Carlos Mercado argued that this is not the best use case for Ether. However, Wooding believes the outcome could still be positive for ETH supporters.

According to Wooding, reduced liquidity and dormant ETH could lead to more direct Ether staking, resulting in higher on-chain yields as spot ETFs capture significant supply.

“While dormant ETH from ETFs might reduce DeFi liquidity, the broader market exposure and increased participation could eventually drive more direct engagement in staking and DeFi, balancing out the initial impact,”

The U.S. Securities and Exchange Commission (SEC) issued initial approval for spot ETH ETFs last month. Issuers and experts expect final approvals before the end of Q3 2024. Bloomberg analyst James Seyffart suggested the regulatory nod could come this month, with SEC chair Gary Gensler indicating an outcome by the end of summer.

Despite speculation that the SEC might reject the issuers, especially after suing ConsenSys over its MetaMask wallet and staking offerings, Wooding is confident that the regulator will approve spot ETH ETFs this month.

Wooding mentioned that rejecting Ethereum funds could damage the SEC’s credibility. He added that a denial might lead to further regulatory discussions and better future proposals.

If the SEC denies spot Ether ETFs, Ether prices may drop. However, Wooding believes any market downturn would be short-lived. He emphasized that the fundamental value and utility of Ethereum remain strong, and the market would likely stabilize as investors refocus on its technological developments and applications.

For more updates on Ethereum and other cryptocurrencies, visit Global Crypto News.

Post Views: 3