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, but its price is not responding as anticipated. On June 24, Ether dropped to its lowest level in over a month, reaching $3,250. Although ETH later regained the $3,400 support on June 25, both onchain and derivatives metrics suggest limited potential for upward movement.
Some analysts are skeptical about the launch of the Ethereum spot exchange-traded fund (ETF) under current market conditions. Despite the regulator dropping its investigations into Consensys and putting Ethereum staking classification on hold, the overall economic environment remains challenging.
Bloomberg ETF analysts Eric Balchunas and James Seyffart predict that Ethereum ETFs could attract between $1 billion and $2 billion in the initial weeks. However, Stephen Richardson, managing director of financial markets at Fireblocks, expects lower inflows at the Ethereum ETF launch.
Markus Thielen, head of research at 10x Research, believes that the revenue Ethereum generates is “minuscule” compared to its market capitalization, suggesting that the asset is not a “viable, sufficiently cash-flow-producing investment.” He also noted that Ether staking yields are lower than those from United States Treasury bonds.
Despite a more favorable cryptocurrency regulatory environment in the U.S., it is important to consider macroeconomic trends. The U.S. Conference Board reported a decline in consumer confidence, indicating concerns about inflation. U.S. Federal Reserve Governor Michelle Bowman reiterated that interest rates would remain elevated “for some time,” highlighting the continued inflation and the potential increase with additional fiscal stimulus.
The Ethereum network faces its own challenges, including high gas fees, which have allowed competing blockchains like BNB Chain and Solana to capture significant volumes. Despite this, Ethereum remains the leader in total value locked (TVL) and decentralized application volumes, although there has been no demand growth in the past seven days.
To gauge 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 remained in a neutral range, despite U.S. Securities and Exchange Commission Chair Gary Gensler confirming the Ethereum spot ETF launch by September.
The justification of Ethereum’s token valuation is challenging, given that the network’s revenue is only $23.9 million per week, based on DefiLlama data. If analysts’ expectations of low spot ETF inflows are confirmed, the likelihood of Ether surpassing $3,700 in the near term seems 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.