In a groundbreaking play that’s making ripples within the cryptocurrency market, The DeFi Report’s founder Michael Nadeau presents a compelling analysis of the anticipated implications of the US Securities and Exchange Commission’s (SEC) recently approved spot Ethereum (ETH) Exchange-Traded Funds (ETFs). Foreseeing a significant impact on the future of Ethereum, and, notably, its price trajectory, Nadeau’s report seems to bank on the potential of a phenomenal surge.
Late May opened a new chapter in the financial marketplace with the SEC sanctioning 19b-4 applications of eight leading financial giants, including Grayscale, Bitwise, BlackRock, VanEck, Ark 21Shares, Invesco, Fidelity, and Franklin. Granted under an encompassing collective omnibus order with the final steps poised to unfold, the path is being paved for a thrilling entry into spot ETF trading.
Steering the conversation towards a confident prediction, Nadeau sets his focus: Why Ethereum could potentially skyrocket to a staggering $15,000. His argument is backed by expert projections from Bloomberg’s ETF gurus, the likes of James Seyffart and Eric Balchunas. They suggest that the inflows footage into Ethereum ETF could realistically be estimated to be somewhere around the 10-20 percent mark of what Bitcoin ETF has experienced.
Nadeau explains that such a projection isn’t unfounded but rather clues in on key observations circling Ethereum. Currently, institutional interest in ETH is on a smaller scale, and its complexity certainly overshadows that of Bitcoin. Even the trading volume of Ethereum’s ETF futures is considerably overshadowed by Bitcoin, oscillating between the 10-20 percent mark. Subsequently, Ethereum’s spot trading volumes are seen to be relatively half the size of that of Bitcoin while its market cap is roughly a third of Bitcoin’s.
However, Nadeau argues that Ethereum is unconventionally dynamic and carves out a distinctive position for itself contrasted against Bitcoin. Ethereum validators, without the looming overhead costs that Bitcoin miners bear, hold off the structural pressure to sell the asset. The understanding of this difference is vital when considering the supply-side dynamics of Ethereum as opposed to Bitcoin.
The financial enthusiast presents undeniably intriguing insights about the current status of Ethereum on-chain activities. Nearly 38% of Ethereum is ‘soft locked’ across multiple mechanisms such as staking contracts and DeFi applications. This trend, in Nadeau’s view, minimizes the available circulating supply. This makes a considerable impact leading to a drop in Ethereum balances on exchanges to levels unseen since 2016, leaving the circulating supply less than 11%.
Nadeau also draws attention to the fundamental principle of reflexivity at work in Ethereum’s market behavior. He elaborates on the potential cyclic effect that could dramatically uplift Ethereum’s market presence and valuation. As the price action ignites on-chain activity, and results in more Ethereum being burned, it could set off a chain of reactions including further narrative-driven price action.
Taking a speculative lens to potential market scenarios, Nadeau assesses the potential rebalancing that might transpire from spot Bitcoin ETF holders to Ethereum, the appeal of a 50/50 split of Bitcoin and Ethereum irking the shifting spotlight of institutional focus on to Ethereum.
Capping off his comprehensive report, Nadeau estimates the cryptocurrency market to hit an impressive $10 trillion market cap. He predicts with “ETH outperforming Bloomberg’s 10-20% inflows projection, at peak cycle, ETH could command a market cap of $1.8 trillion pricing ETH at approximately $14,984”; all this assuming no change in supply.
At the time of this reporting, Ethereum is presently trading at $3,823, roughly 29% shy of its 2021 record high. Analysts are keenly eyeing the floor, as the Ether price seems to be hovering before the 0.786 Fibonacci on the 1-week chart. These are undoubtedly intriguing times for the world of Ethereum and crypto, in general.
