Ethereum ETF launch preceded by high network activity, low gas fees, and price weakness

Ethereum exchange-traded funds (ETFs) applications submitted by players like Bitwise and Fidelity may start trading as early as July 2024. The US Securities and Exchange Commission (SEC) has received the final S-1 amendments from the applicants and the industry is optimistic about a quick launch.

Also read: Spot Ethereum ETFs to launch July 2nd, says Bloomberg analyst

Ethereum has displayed mixed signals ahead of the official ETF launch, with prices trending downward as on-chain activity increases.

Ethereum ETF launch could be imminent

Bloomberg senior analyst Eric Balchunas recently updated the Ethereum ETF launch deadline to July 2. Industry voices also suggest that the substantial groundwork for the SEC approval is nearly complete. Nate Geraci, President of an advisory firm called The ETF Store took to X to state there’s no reason for delays beyond July 4.

Also read: SEC permanently ends all investigations into Ethereum

With the early timeline for the introduction of Ethereum ETFs, the market is giving signals in the form of price, gas fees, and on-chain activity. The expectation of new avenues for the Ethereum network with the ETF launch could be responsible for the spike in Ethereum’s daily transaction volume and unique address count while also lowering gas fees.

However, the on-chain architect of Pistachio Fi bsmokes.eth, noted on X that the overall L1 fee market is “more efficient.”

Ethereum’s Dencun upgrade also has a major role to play as it has freed the main layer, lowering operational congestion and shifting onus on L2s. An analysis of BitInfoCharts also revealed that the average transaction fee for Ethereum from July 2023 to June 2024 has reduced to $1.91 from a March high of almost $30.

ETH Average Gas Fees | Source: BitInfoCharts

Etherscan’s 7-day historical oracle gas average since 2020 shows a consistent decline in June 2022 and June 2023. However, the average gas fee is higher at 5 gwei in 2024. 

7-day Oracle Gas Fees Average | Source: Etherscan

Ethereum is witnessing the largest increase in active ETH addresses over any six-month period per data by Santiment. At the time of writing, active ETH addresses have reportedly surpassed 730,000.

ETH price might remain subdued after launch

Ethereum trading volume increased in May and has maintained a lower but positive sentiment according to Santiment data . Amid the rise, the price is less promising.

Ethereum Active Addresses | Source: Santiment

According to CoinGecko, Ethereum’s price has declined almost 6% over the last seven days. The all-time high for Ethereum was under $5000 on November 10, 2021, over two years ago. The launch of the ETFs may not be enough to push the prices higher. Andrew Kang from Mechanism Capital estimates that Ethereum ETF flows could be around 10% of Bitcoin ETF flows.

In turn, the figure could translate to approximately $0.5 billion in true net buying within six months. While Kang sees Ethereum trading between $3,000 and $3,800 before the ETF launch, the figure might turn lower after the trading begins. The analyst sees ETH potentially dropping to a range of $2,400 to $3,000, lower than the above $4000 expectations.

 

Cryptopolitan reporting by Shraddha Sharma