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Spot ether exchange-traded funds are on the horizon, and the historic debut should mark another major win for the crypto industry.
But what it could mean for the token itself is less clear.
Wall Street has issued a range of outlooks on how the world's second-largest cryptocurrency will move once the ETFs launch. According to Reuters, trading could commence as soon as Tuesday, July 22.
Even before the Securities and Exchange Commission approved the funds in May, optimism in their creation drove bullishness.
Since March, Standard Chartered has projected that ether will hit $8,000 by the year's end. The bank expects these funds to drive $15 billion to $45 billion worth of ether inflows in a 12-month window.
With ether trading at just under $3,500 as of Friday, that indicates upside of over 130%.
Bulls derived their confidence from how bitcoin behaved after its spot ETFs launch in January. With money pouring into these funds through early 2024, the apex token climbed over 73%, reaching an all-time high of $73,780 in March.
However, opinions split over whether that momentum will materialize for ether.
Ether ETFs will likely only see a fraction of bitcoin's inflows, JPMorgan noted Nikolaos Panigirtzoglou wrote in late May.
Citi made a similar forecast this month, anticipating that ETF inflows will make up 30%-35% of what bitcoin notched. That amounts to $4.7 billion to $5.4 billion through the next six months, the report said, cited by CoinDesk.
To back this, both banks outlined some of the same factors. They noted bitcoin's first-mover advantage and stressed that the ether token offers functionality that wouldn't be accessible through the ETFs, thus limiting demand.
For instance, ETF investors won't be able to access ether staking, a function where the token is locked up in return for a yield.
However, others find these predictions too bearish. In late June, Steno Research projected ether to reach $6,500 this year on strong inflows:
"The market's outlook on the upcoming Ethereum spot ETFs is overly pessimistic. We anticipate a net inflow of $15 to $20 billion within the first year, as Ethereum possesses qualities that appeal to Wall Street," the firm said. "This should drive its value significantly higher, not only in dollar terms but also relative to Bitcoin."
Sources who spoke with Reuters also noted that ether's liquidity is much more constrained than bitcoin, partly due to yielding restrictions.
According to Galaxy Digital, this makes ether more price-sensitive to inflows. In other words, the token might still achieve sizable gains without matching the flows into spot bitcoin funds.
"Despite uncertainty around the reception of the ETH ETF, capturing 10-20% of Bitcoin ETF flows could propel ETH above 4,000, nearing its peak of 4,800," QCP Capital posted on Telegram in mid-June.
Supply considerations are one of the leading reasons SynFutures CEO Rachel Lin predicted ether could rocket to $22,500 this cycle. In a May note, she outlined that ether's supply has remained at 120 million since 2022, while bitcoin's trove has kept growing.
But whatever impact net inflows and supply may have on ether's price in the coming months, the ETFs' immediate impact may disappoint investors, some say.
"Price movement will be limited in the first few days, as there will be a slow rotation into ETFs from crypto exchanges instead of rapid inflows." FxPro senior market analyst Alex Kuptsikevich told Business Insider.
He added: "But look at it more broadly - it's only the second cryptocurrency that can easily be added to investors' portfolios. In the first couple of months after the launch of the ETF, Ethereum's relative weighting may rise."
