What happens when the Ethereum ETF comes around?

Combined with deflationary supply dynamics, the adoption of the Ethereum ETF could lead to a veritable price firestorm for Ethereum.

In a sense, the recent surge in ETH investments by existing funds is just the beginning of what is likely to follow. Indeed, BlackRock and co. own many times more capital, which could now flow directly into Ether. To be precise, the 10 largest asset managers hold $44.48 trillion. If just one percent of this - i.e., $445 billion - flows into ETH, Ethereum's market capitalization would nearly triple and the price of ETH would rise to about $6,200.

ETH deflation increases

Not to mention the declining supply of Ethereum. As if that weren't enough, Ethereum's "ultrasonic money mechanism" is also throwing oil on the fire. Since the London hard fork, ETH has evolved from a net-inflationary digital asset to an increasingly deflationary one. The network experienced a brief period of net inflation between August and October due to lower network activity.

Source: Glassnode

In recent weeks, however, overall ETH supply has once again become net deflationary due to declining issuance rates and a higher volume of supply burning. This trend intensified in November and is likely to continue with increasing demand and activity on the network.