The price of Ether (ETH) may be on the verge of a major event with the integration of the altcoin into traditional financial markets through a spot ETH ETF, however, the price is not responding as anticipated. On June 24, Ether reached its lowest level in over a month, dropping to $3,250. Although ETH did regain the $3,400 support on June 25, both onchain and derivatives metrics suggest limited potential for upward movement.
Some analysts believe that the launch of the Ethereum spot exchange-traded fund (ETF) may not result in significant net inflows under current market conditions. Despite the regulator dropping investigations into Consensys and shelving the potential classification of Ethereum staking as a security, the broader economic environment remains challenging.
Bloomberg ETF analysts Eric Balchunas and James Seyffart project that Ethereum ETFs could attract between $1 billion and $2 billion in the initial weeks. Similarly, Stephen Richardson, managing director of financial markets at Fireblocks, expects significantly lower inflows at the Ethereum ETF launch.
Markus Thielen, head of research at 10x Research, noted that the revenue Ethereum generates is “minuscule” compared to its market capitalization, indicating that the asset does not currently represent a “viable, sufficiently cash-flow-producing investment.” Thielen also pointed out that the yields from Ether staking remain lower than those from United States Treasury bonds.
Despite a more favorable cryptocurrency regulatory environment in the U.S., it is important not to overlook macroeconomic trends. The U.S. Conference Board reported on June 25 that its consumer confidence index fell to 100.4 from 101.3 in May, suggesting that households are concerned about inflation. U.S. Federal Reserve Governor Michelle Bowman reiterated that interest rates would remain higher “for some time,” highlighting that inflation is still “elevated.”
The Ethereum network faces its own challenges, including high gas fees, which have led to competing blockchains like BNB Chain (BNB) and Solana (SOL) capturing significant volumes. Despite this, Ethereum remains the leader in total value locked (TVL) and decentralized application volumes, but there has been no demand growth in the past seven days, with competitors like Solana and Aptos experiencing increased activity and deposits.
To understand the sentiment of Ether’s professional traders, one must examine ETH futures metrics. The Ether futures premium fell below the 10% threshold on June 21 and has since remained in a neutral range. This shift represents a change in trend after five weeks of bullish sentiment and is concerning given the confirmation of the Ethereum spot ETF launch by September.
Markus Thielen pointed out the challenge of justifying Ethereum’s token valuation, given that the network’s revenue is only $23.9 million per week, based on DefiLlama data. Therefore, if analysts’ expectations of low spot ETF inflows are confirmed, the likelihood of Ether surpassing $3,700 in the near term appears slim.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.