Ethereum ETF buying outpaces new supply: Will it push ETH price to $4.5K?

The impending launch of spot Ethereum Exchange Traded Funds (ETFs) in the United States has ignited significant excitement regarding the future price trajectory of Ethereum (ETH). Following the successful, albeit volatile, launch of Bitcoin ETFs, market analysts are now forecasting a structural supply shock for ETH, driven by sustained institutional demand meeting a relatively inelastic and scarce asset.

**The Supply Shock Mechanism**

Ethereum’s supply dynamics are fundamentally different from Bitcoin’s, primarily due to staking and the burning mechanism introduced by EIP-1559. Approximately 25% of the total ETH supply is currently locked in staking contracts, drastically reducing the circulating supply available for immediate purchase. Furthermore, the net issuance of new ETH is relatively low, often turning deflationary during periods of high network activity.

Estimates suggest that the demand generated by new US spot ETH ETFs could rapidly outpace the daily net issuance of new coins available on exchanges. If institutional inflows mimic even a fraction of the demand seen during the initial weeks of the Bitcoin ETF launches, the required absorption rate could easily exceed 10,000 to 20,000 ETH per day. Given the current low net issuance rates, this aggressive institutional buying pressure translates directly into a critical supply constraint for market makers and liquidity providers.

**Analyst Projections and Price Targets**

Market expectations suggest that the approval and trading launch of these ETFs will unlock billions in new capital flows from traditional finance sectors, including wealth managers and registered investment advisors (RIAs). The primary bullish thesis is centered on ETH reclaiming its prior all-time high (ATH) of approximately $4,890.

The $4,500 price target is widely considered a crucial psychological and technical hurdle. Achieving this level would signify that ETH has successfully broken past the resistance established during the previous bull cycle, leveraging ETF capital as the primary catalyst. Successful penetration of this resistance zone is often a precursor to parabolic price discovery movements, which could potentially drive the price even higher toward the $6,000 level in the medium term.

**Challenges and Caveats**

While the supply-demand imbalance strongly favors a price increase, the realization of the $4,500 target is contingent on several factors. Firstly, the actual rate of institutional adoption of ETH ETFs may be slower than initial Bitcoin ETF adoption, given the slightly higher complexity of the asset compared to Bitcoin. Secondly, the broader macroeconomic environment—specifically interest rate movements and inflation—will continue to exert influence on high-beta assets like crypto.

However, the combination of reduced circulating supply, continued network usage (driving fee burns), and massive structural demand from newly accessible institutional channels suggests that the framework for significant price appreciation is firmly in place. The influx of ETF capital appears set to initiate a potent supply shock, making the $4,500 target highly plausible in the near to medium term.

Source: Ethereum ETF buying outpaces new supply: Will it push ETH price to $4.5K?