Bankless: Will Spot Ethereum ETF Stimulate New ETH Demand?

Original title: "Will ETFs Drive New ETH Demand?"

Author: Jack Inabinet

Compiled by: BitpushNews Mary Liu

After hard and cumbersome work After a lengthy approval process, the spot Ethereum ETF is finally listed on traditional stock exchanges!

For years, the crypto community has been eagerly awaiting the launch of ETF products, anticipating that their arrival will provide direct economic benefits to global asset management giants and thereby promote Ethereum. If unprecedented amounts of funds flow into Ethereum, mainstream adoption of the chain will Events will also follow.

Today, let’s discuss the most watched indicator of Ethereum in the post-ETF era: the future direction of price.

Looking ahead

According to Yahoo Finance data compiled by The Block Pro Research, the Ethereum ETF’s cumulative trading volume exceeded $1.019 billion on its first day of listing on a U.S. exchange.

While the spot ETF’s track record remains limited, many expect the product to be bullish for ETH, much like the BTC ETF.

The spot BTC ETF is one of the hottest financial products this year, attracting $18.6 billion in fund conversions from Grayscale GBTC and amassing an additional $17 billion in AUM.

A visual stat that tells us about the success of spot BTC ETFs: BlackRock’s IBIT alone has seen more inflows this year than Invesco’s retail-friendly QQQ Nasdaq 100 Fund, which on a year-to-date inflow basis has Ranked fourth among ETF funds.

While inflows into spot BTC ETFs are certainly not low in absolute dollar value, it is clear that inflows from net new buyer types such as pension funds are limited.

Spot BTC ETFs are designed to make direct cryptocurrency investment available to every mainstream financial institution, but demand for these products from institutional investors is relatively limited.

Only investment advisors (who allocate private capital that could otherwise be used to buy BTC in other markets) and hedge funds (entities unlikely to have directional BTC exposure) are significant buyers in non-isolated cases.

While the price of BTC in USD did rise after the ETF’s launch, it has yet to keep pace with Wall Street’s best-performing AI stocks and is just barely on par with established names like General Electric, GoDaddy, Walmart, and Progressive Insurance stocks were flat.

Source: TradingView

Spot ETFs did not “work miracles” to drive new capital to purchase cryptocurrencies; on the contrary, the inflow of funds into BTC ETFs was mainly driven by the market’s strong risk appetite sentiment. Unfortunately, Unfortunately, even with the arrival of this much-anticipated catalyst, BTC has failed to break out and sustain its all-time highs.

With BTC peaking four months ago and global economic data continuing to weaken, it’s questionable whether broader market tailwinds can continue to support riskier crypto assets.

Furthermore, given the many ways existing sophisticated investors can purchase ETH exposure through TradFi using futures and trust-based products, it’s unlikely that there is a significant amount of capital waiting on the sidelines to purchase less differentiated spot products.

Given all the above factors, the same goes for the ETH ETF. There must be new investor demand for the ETH price to rise.

Milestones to Celebrate

Spot ETFs were the ultimate catalyst for investor interest in ETH and permissionless blockchains as a whole, but as approvals finally materialized and investor excitement over Ethereum’s ambiguous future faded, Critical thinking is needed about Ethereum’s current performance.

Ethereum has reached a critical moment: adoption needs to accelerate for the ecosystem to replace the traditional financial system. Fortunately, ETF approval will thrust Ethereum into the spotlight in the coming months as issuers promote their products and investors seek information about the blockchain that aims to replace the traditional financial system.

Although the mainstream has not yet explored hidden on-chain scenarios, financial figures such as BlackRock CEO Larry Fink have personally promoted tokenization and the bull market reasons for Ethereum, which may stimulate non-crypto people to feel and understand the area. Blockchain technology.

Once the general public realizes the vast improvement that blockchain has over traditional financial systems, on-chain usage will exponentially increase as more individuals begin to store wealth in digital assets and take advantage of blockchain technology level growth, thus having a positive impact on cryptocurrency prices and fundamental bull runs!

Bitcoin’s overly simplistic digital gold narrative failed to inspire mainstream enthusiasm for the cryptocurrency and pushed token valuations to all-time highs, while the emergence of bullish sentiment on Ethereum will drive a surge in on-chain usage and Allowing investors to become more deeply involved in the industry.

ETF gives TradFi giants a reason to be excited about cryptocurrencies and provides Ethereum with the best chance of being understood. However, if there is no outstanding report card this time, it may bring the opposite In consequence, this could mark the beginning of Ethereum’s decline and undermine the credibility of the entire crypto revolution narrative.

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