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Spot ETH ETFs Inflows Could Spark Major Catch-Up Trade

Ether’s market value relative to Bitcoin is close to multiyear lows, and strong inflows into spot ETH ETFs could spark a catch-up trade, the report said.

Potential Surge in Spot ETH ETF

Spot Ether (ETH) exchange-traded funds (ETFs), once approved for trading in the U.S., could see net inflows of up to $5 billion in the first six months, according to a Monday research report by crypto exchange Gemini. Combined with the current assets under management (AUM) of the Grayscale Ethereum Trust (ETHE), this could bring the total AUM for spot ETH ETFs in the U.S. to between $13 billion and $15 billion within the first half-year.

Market Value and Inflows Impact

Gemini highlighted that Ether’s market value relative to Bitcoin remains close to multiyear lows, and these inflows could improve Ether’s standing. “Given the AUM comparable in international ETF markets, robust on-chain dynamics, and differentiating factors such as a thriving stablecoin environment, there is favorable risk-reward of an ETH catch-up trade in the months to come,” Gemini stated.

Approval and Expected Performance

Ether spot ETFs are anticipated to begin trading in the U.S. in the coming months following the Securities and Exchange Commission’s (SEC) approval of initial filings in May. Bitcoin spot ETFs received approval in January this year. If the Ether/Bitcoin ratio returns to the median value of the past three years, it could rally almost 20% to 0.067. A return to the maximum of 0.087 would represent a 55% rally.

Inflow Expectations

Gemini suggested that net inflows into spot Ether ETFs below $3 billion would be disappointing, considering that Bitcoin ETFs saw $15 billion of inflows in the first six months. Net inflows above $5 billion, or a third of the Bitcoin ETF level, would be a strong performance, and inflows close to 50% or $7.5 billion would be a “significant upside surprise.”

Positive Sentiment and Future Projections

This positive sentiment echoes comments from Steno Research, which last week predicted that Ether could hit $6,500 later this year due to strong ETF inflows and other favorable conditions.

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Disclaimer: Not Investment Advice

it’s crucial to understand that the information provided here is not to be construed as investment advice. The crypto market is dynamic and highly speculative, and decisions should be made based on thorough personal research and consideration of individual risk tolerance. Always consult with financial professionals and conduct your own due diligence before making any investment decisions. The intention of this exploration is to present insights and trends, not to provide specific investment recommendations.

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