ETH Price Analysis: Keys To Watch Out For When Ethereum ETFs Start Trading

Ethereum ETFs are set to start trading earlier today following an unexpected approval from the SEC in May.

While analysts are divided on how initial demand will unfold, most are optimistic that billions of dollars are expected to flow into the eight new funds providing exposure to ETH.

Several major players, including BlackRock, Fidelity, Grayscale, and Bitwise, are involved in the launch of Ethereum ETFs. Matt Hougan, CIO of Bitwise, believes that Ethereum ETFs will not diminish the momentum of Bitcoin ETFs but will likely attract additional investments. He suggested that the introduction of Ethereum ETFs may even accelerate Bitcoin ETF flows, as professional investors prefer having exposure to multiple assets. 

Bitcoin ETFs attracted around $15 billion in just five months, and Bloomberg Intelligence’s James Seyffart predicts Ethereum ETFs might capture about 20% of that amount. However, Seyffart emphasizes that trading volume in the first few weeks will be crucial in gauging genuine interest and demand, more so than initial net inflows. 

Meanwhile, a key indicator up to the Ethereum ETF launch is the influx of ETH into exchange-hosted wallets. Since early July, there has been a rise in the amount of ETH being transferred to exchanges. This increase in market supply has contributed to Ethereum’s price stagnating between $3,400 and $3,580 over the past week. 

Since the start of July, investors have moved about 300,000 ETH, worth around $1 billion, onto exchanges. This shift indicates that many holders are hearing up to trade their ETH possibly in anticipation of increased volatility and trading volume with the ETF launch. While such a significant influx of ETH could signal potential sell-offs, it also offers the liquidity necessary for substantial trading activity. 

Another important indicator is the derivatives market, where traders are displaying a bullish outlook on ETH, Currently, leveraged long positions to $1.20 billion, significantly higher than the $638 million in short positions. 

This bias towards long positions suggests that traders anticipate a rise in ETH’s price following the ETF launch. At press time, ETH is trading at $3,501.51.