CoinDesk reports:
Ethereum (ETH) faced a serious slump in early 2023, but began to recover in early 2024. The price of the cryptocurrency surged by over 50% from January 1st and had exceeded $4000 by March. However, a recent 11% drop in the past month has raised concerns among investors and analysts.
What factors can drive Ethereum’s growth?
Despite the recent downturn, prominent cryptocurrency analyst Degenetrading remains optimistic, predicting that Ethereum may reach $6000 by September 2024. This forecast is in response to comments from Andrew Kang, founder of Mechanism Capital, who expressed caution about the imminent launch of an Ethereum spot exchange-traded fund (ETF) in the US market. Visit NEWSLINKER for the latest tech news.
Degenetrading attributes his bullish stance to several key factors. One of them is the significant $5 billion increase in open interest in the Chicago Mercantile Exchange’s futures contracts following the ETF news. This potential growth in trading activity could attract a large influx of capital into Ethereum.
Why is liquidity important for Ethereum?
Another key consideration is the liquidity difference between Ethereum and Bitcoin. Despite Ethereum’s market cap surpassing $400 billion, approximately one-third of Bitcoin’s $1.2 trillion, its liquidity is only 10% of Bitcoin’s. This suggests that even a few billion dollars flowing into Ethereum could have a significant impact on its price.
Key conclusions from the analysis
– Approval of the Ethereum spot ETF could inject over $500 million into the market within six months.
– Ethereum’s liquidity constraints mean that moderate capital inflows could have a significant impact on its price.
– The conversion of Grayscale’s Ethereum Trust (ETHE) into an ETF could increase Ethereum’s market share, similar to Bitcoin’s experience.
What is the current price of Ethereum?
Currently, speculation on the potential start date for Ethereum ETF trading in early July has stabilized the price of Ethereum. The cryptocurrency is priced at $3380, with a slight 0.20% increase in the past 24 hours. With a market value of $406 billion and a trading volume of $11.69 billion, investor interest seems lukewarm. The market is closely watching to see if Ethereum will experience a similar decline to Bitcoin if it begins trading next month.
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