Thomas Fahrer, co-founder of Apollo, a firm focused on Bitcoin adoption, has raised concerns about the potential consequences of the approval of spot Ethereum ETFs. According to Fahrer, the transition might not be seamless for Ethereum as the market awaits this significant development. Fahrer’s warning comes on the heels of the impending approval of spot Ethereum ETFs, which is reminiscent of the launch of spot Bitcoin ETFs earlier this year.
The Grayscale Ethereum Trust, which was established in 2017, currently holds around $9 billion worth of ETH, most of which was acquired before staking became a reality. With the approval of spot Ethereum ETFs, these funds will be unlocked, and Fahrer anticipates a “bloodbath” in the market as a result. He further predicts that this transition will accelerate the exchange of ETH for BTC, signaling potential challenges for Ethereum holders in the near future.
Drawing parallels with the approval of spot Bitcoin ETFs, historical data suggests that such a move could lead to high volatility in the market. Following the approval of spot Bitcoin ETFs, Bitcoin experienced a significant drop in value, with more than a 20% decrease within 12 days due to substantial sell-offs. The transition of Grayscale’s Ethereum Trust to a spot ETF is expected to mirror the “sell the news” event witnessed in the Bitcoin market.
Julio Moreno, head of research at CryptoQuant, has pointed out a critical market indicator that indicates the market has already begun reacting to the imminent approval of Ethereum spot ETFs. The narrowing of Grayscale’s ETHE discount to ETH in recent days suggests that market participants are bracing for the potential impact of this development. Similar trends were observed in the Bitcoin market before the approval of spot Bitcoin ETFs.
While the short-term impact of the approval of spot Ethereum ETFs might lead to initial turbulence in the market, there are contrasting views on the long-term implications for Ethereum. Some observers believe that despite the initial downturn in Bitcoin’s valuation post-ETF, the introduction of a spot ETF ultimately benefited the market, leading to increased acceptance and a surge in price. Crypto analyst Miles Deutscher suggests that if Ethereum follows a similar trajectory to Bitcoin post-ETF approval, it could reach $6,446 by a certain date.
As the market eagerly anticipates the approval of spot Ethereum ETFs, there are mixed sentiments regarding the potential impact on the market. While some foresee a challenging transition for Ethereum, others believe that the long-term implications could be positive. As market dynamics continue to evolve, it remains to be seen how Ethereum will navigate through this critical juncture.