Bitwise Matt Hougan CIO predicts that the next spot will be a ‘Crashing Event’ Ethereum Digital assets will be valued at new record highs. They’ll surpass $5,000.
Hougan wrote to investors on June 16, a note. wrote:
“By year-end, I’m confident the new highs will be in. And if flows are stronger than many market commentators expect, the price could be much higher still.”
Hougan stated that the price for ETH may not increase immediately following ETFs’ launch. next The $11 billion may not be enough to cover the bills this week Grayscale Ethereum Trust (ETHE) “After it becomes an ETP”
Hougan emphasized, however, that the spot ETFs tend to generate new demand in commodities such as ETH. He referred to the launch of similar products for BitcoinThe market has been anticipating the approval of these products since October 20, 2023.
Why ETH might reach a high new level
Hougan explained three reasons structurally why inflows to spot ETH ETFs would have a greater impact on the market than BTC.
He claimed that ETH has a short-term rate of inflation at 0% compared to Bitcoin, which was 1.7% in the beginning when ETFs were launched. It means BTC is needed. “$16 billion of Bitcoin buying per year just to tread water.” The situation is different with ETH “people using Ethereum-based applications—everything from stablecoins to tokenized funds—consume ETH as well.”
Hougan emphasized the relationship between “the amount of ETH being consumed” Note the network activity “another lever of organic demand working in [ETF] investors’ favor.”
Hougan mentioned that Ethereum is not affected by the “Threat of”miners’ sellingBecause its investors do not have to sell in order to make profits, ” ETH stakeholders are investors that have locked away a set amount of coins in order to keep the network running smoothly.
“He wrote:
“A key difference between Bitcoin mining and Ethereum staking is that staking does not have significant direct costs. As a result, Ethereum stakers are not forced to sell the ETH they produce. Even if Ethereum’s inflation rate rises above 0%, I do not expect significant selling pressure from stakers.”
Hougan noted that the number of approximately 40% of the Ethereum supply The staking or smart contract locks it up, making the product unavailable to sell.
Hougan reiterated the prediction that ETH ETFs under management will be able to increase in value. reach $15 billion in their first 18 month of business and concluded that
“ETH is currently trading at ~$3,400, just 29% below its all-time high. If the ETPs are as successful as I expect—and given the dynamics above—it’s hard to imagine ETH not challenging its old record.”
[Editor’s Note:
Data from ultrasound money shows that Ethereum’s inflation rate is now above zero percentage, coming in at 0.466% over the past 24 hours and 0.595% over the past 30 days. However, since The Merge it has recorded a negative 0.136% inflation due to ETH being burned through transaction fees, making it deflationary over 1 year and 306 days.
Hougan’s argument regarding Ethereum’s inflation ultimately relies on the network’s consumption. High transaction numbers lead to high amounts of ETH burned and, thus, lower inflation. Yet, the surge in layer-2 usage due to lower fees has resulted in fewer mainnet transactions over the past few months, thus pushing Ethereum back into inflationary territory.]
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Source: cryptoslate.com