ETH falls short-term after ETF launch, but staking approval and UX upgrade will be long-term catalysts

Author: The DeFi Investor

Compiled by: Deep Tide TechFlow

The future outlook of Ethereum

The Spot Ethereum ETF is finally available.

Judging from the initial transaction volume, this launch was quite successful.

However, as we can see, ETH started to fall after the launch.

In this article, I will discuss the reasons behind this, the future direction of ETH price, and two important catalysts on the horizon for Ethereum.

My expectations for ETH price trend

I think there are two main reasons why ETH is currently underperforming BTC:

• The launch of spot ETHETF is a "sell news" "Event: This phenomenon also occurred in the short term after the launch of the spot BTC ETF.

Since the spot ETH ETF was approved months ago, everyone who wants to buy ETH has plenty of time to do so. Therefore, catalysts known in advance often become "sell news" events. The launch of

• ETHETF has unlocked $9 billion in ETH in the Grayscale Ethereum Trust : This ETH has been locked up for years and now holders can finally sell it, so that’s a lot People are selling.

So how long will it take for this decline to end?

In the case of BTC, the spot BTC ETF bottomed out about two weeks after its launch. Afterwards, prices traded sideways for a few days before hitting a new all-time high.

If demand for spot Ethereum ETFs is high in the coming weeks, a similar situation could happen for ETH. But for this to happen, the ETH ETF’s net flows need to turn positive.

For example, yesterday the ETH ETF saw $133 million in outflows due to selling pressure on the Grayscale Ethereum Trust.

There are also some legitimate concerns about ETH in the short term:

Ethereum’s upcoming catalysts

I would also like to talk about two important upcoming catalysts for Ethereum.

The first one is the approval of EthereumETFStaking. This could significantly increase demand for spot Ethereum ETFs. While an ETH staking yield of around 3.2% per year may not seem like much, the fact that ETH has a lower annual inflation rate and the benefits of staking may make ETH more attractive to some institutions than BTC.

According to the SEC commissioner, Ethereum ETF staking “can always be reconsidered,” so its approval is only a matter of time.

The second catalyst is the release of Pectra, the next hard fork of Ethereum. This major upgrade is expected to happen by the end of the fourth quarter of this year or the first quarter of 2024. Pectra will introduce several major changes:

• Make Ethereum account addresses more programmable

• Increase the maximum stake for ETH validators from 32 to 2048 ETH

By making Ethereum Account addresses are more programmable, and Pectra will bring significant on-chain user experience improvements.

For example, it will support sending transactions in batches, develop social recovery features for wallets, and allow dApps to pay users for gas. User experience upgrades like this are what cryptocurrencies need to achieve mass adoption.

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