The world's largest crypto Binance evaluated the potential impact and consequences of spot Ethereum ETFs, which opened for trading yesterday, on the market.
Binance noted in a blog post that the US SEC's approval of spot Ethereum ETFs could greatly impact the ETH price and the broader cryptocurrency market.
ETFs Will Raise Ethereum Price!
Binance analysts stated that they expect ETH ETFs to significantly increase demand and push the ETH price higher, following a similar trend observed with Bitcoin ETFs.
“The approval of Spot Ethereum ETFs will lead to a significant increase in ETH prices due to increased demand from institutions that will purchase and hold ETH.
This mirrors the impact seen on BTC ETFs earlier this year; ETFs have reduced the availability of Bitcoin on exchanges and led to a price increase.”
Analysts have noted that with a significant amount of ETH locked up in staking and smart contracts, and the supply of ETH on exchanges shrinking, ETH prices may be more sensitive to ETF inflows compared to BTC, potentially leading to sharper price movements.
Lack of Staking in ETFs May Suppress Demand!
Pointing out that staking is popular among Ethereum investors, analysts stated that one of the biggest questions in the ETF is the lack of a staking feature.
Stating that ETF issuers and investors will not be able to put ETH shares into staking due to SEC regulations, analysts said, “This restriction may lead ETH holders who are more knowledgeable about crypto to prefer to hold and stake their ETH directly rather than investing in ETFs. Still, holding ETH directly “And the target audiences for staking and ETF investments are likely to remain different, where crypto users will prefer to stake directly, while mainstream and institutional investors will prefer to invest in ETFs.” said.
More Long-Term Investors Will Participate in Ethereum ETFs!
Finally, the report included the evaluation of Binance CEO Richard Teng.
Stating that institutional participation in Ethereum ETFs can provide a stable capital flow over time, Binance CEO said:
“While we anticipate steady capital inflows into Ethereum ETFs, it is unlikely to be large initially and inflows will fluctuate depending on a variety of macroeconomic factors.
With SEC approval and listing, these ETFs will now typically be invested in by long-term-minded institutions.
“This institutional participation can provide a steady and significant flow of capital over time.”
*This is not investment advice.
