JAKARTA - Matt Hougan, Chief Investment Officer (CEO) at Bitwise, predicts that Ethereum (ETH) can reach a new high after the launch of an exchange-trained fund (ETF) for Ethereum. Hougan anticipates significant capital flows into Ethereum, similar to what happened in the Bitcoin ETF, which could push the price of ETH to 5,000 US dollars (Rp80,000,000).
The price of Ethereum is currently lagging behind Bitcoin and several other altcoins. In mid-March, the price of ETH almost touched 4,000 US dollars (Rp64,000,000), while Bitcoin hit a new record high, as did Stacks (STX) and Binance Coin (BNB) in June.
Matt Hougan's Prediction: What's The Basis?
Hougan based its projections on the basic economic principles of supply and demand. He explained that the launch of the ETF for ETH would introduce ETH to new investor classes, or in other words, new sources of demand. Bitcoin has increased 25% since the launch of Bitcoin ETFs, and Hougan believes Ethereum could have had a similar impact, otherwise larger.
Hougan estimates Ethereum's ETF will recall more than US$15 billion (Rp240 trillion) in new assets in the first 18 months, potentially pushing the price of ETH above the current price of around US$3,400 (Rp54,400,000) and challenging and exceeding US$5,000 (Rp80,000,000).
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Then, secondly, Hogan assessed that inflation rate is a determining factor in addition to supply and demand. Ethereum's current inflation rate is 0%, compared to Bitcoin which is 1.7%. The lack of new supply and high demand can boost the price of ETH. In addition, increased activity in the Ethereum network causes higher ETH consumption.
This optimistic outlook includes a lower short-term inflation rate, mandatory sales behavior of ETH stakers, and a substantial part of ETH that is staked or locked in a smart contract.
Then, the third basic is Staking vs. Mining. Where ETH stakers, unlike BTC miners, don't need to sell their prizes to cover costs, reduce selling pressure. Ethereum uses a proof-of-stake system where stakers earn prizes at no high cost, in contrast to Bitcoin mining processes that require high energy. However, it should be noted that there is no ETF ETH application that includes staking.
The latter consideration factor is locked tokens in DeFi. About 28% of the ETH is on-stake and not available for sale, with an additional 13% locked in a decentralized finance contract (DeFi). This means that about 40% of the entire ETH is not circulating in the market, which further restricts supply and potentially encourages higher prices.
Hougan estimates the new Ethereum ETF will raise 15 billion US dollars (Rp240 trillion) in assets within 18 months, potentially pushing ETH to break its previous record high of around $3,400. Given the current dynamics and expected demand, it is likely that ETH will surpass its old record.
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