Ethereum is in high speculation territory with spot Ether ETFs set to start trading on July 23. However, an analyst warns that once the initial buzz fades, the asset could face a serious oversupply issue.

“If the supply of ETH keeps increasing by ~60k/month like it has been since April, then by Dec the supply will be back to what it was at the merge,” crypto trader and Into The Cryptoverse founder Benjamin Cowen wrote in a July 19 X post , referring to when the much-anticipated Merge transitioned  Ethereum ( ETH ) to its current proof-of-stake consensus model in September 2022.

Ethereum, which became deflationary after the Merge , saw its supply drop by approximately 455,000 ETH by April 2024.

ETH price may dip after spot Ether ETF 'novelty' wears off due to surging supply image 0 ETH supply has increased by around 150K ETH in the past three months. Source: Benjamin Cowen

However, since then, the supply has increased by around 150,000 ETH. Cowen claims that if it continues to increase at this rate it might revert to what it was prior to the merge happening over two years ago.

“If the supply of ETH keeps increasing at 60,000 ETH per month, then we will see the supply revert to what it was back at the merge,” Cowen stated.

“If it follows 2016, then ETH/BTC final capitulation will not start until September 2024, which would be enough time for the novelty of the spot ETF relative to BTC to potentially wear off,” he added.

Ether's price may be lower than its current price in September

While he believes that in 1.5 years the price of Ether will "likely be higher" than its current price, there is a "decent chance" that it declines within the next "3-6 months." At the time of publication, Ether is trading at $3,507, according to CoinMarketCap data .

Meanwhile, just a few days prior, onchain analyst Leon Waidmann pointed out that Ethereum is facing a "supply crisis." 

"Exchange balances down to 10.2% while 39.3% of ETH is locked in smart contracts," Waidmann stated in a July 16 X post , claiming that most investors don't realize "how tight" the ETH supply side is.

Five spot Ethereum exchange-traded funds (ETF) will begin trading on the Chicago Board Options Exchange on July 23 , “pending regulatory effectiveness,” CBOE announced on July 19.

Related: Ether could outperform Bitcoin after spot ETF launch — Kaiko

On May 23, the United States Securities and Exchange Commission (SEC) approved rule changes permitting the listing of several spot Ether (ETH) ETFs .

The five spot Ether ETFs set to commence trading are the 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF.

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