The launch of US exchange-traded funds (ETFs) for Ethereum (ETH), the second-largest cryptocurrency, may face considerably much less demand in comparison with spot Bitcoin merchandise, casting a shadow on Ethereum’s outlook, in keeping with analysts.
Doubts Over US Ethereum ETF Demand Pose Problem for Second-Largest Cryptocurrency
BlackRock Inc. and Constancy Investments are among the many issuers searching for to record Ethereum ETFs pending closing approvals from the Securities and Alternate Fee (SEC).
However JPMorgan Chase & Co. strategists predict that internet inflows into Ethereum ETFs might be a lot smaller than the $15.3 billion flowing into Bitcoin ETFs this 12 months.
5-month-old Bitcoin ETFs have capitalized on a story that positions Bitcoin as “digital gold,” an idea that Ethereum lacks.
Moreover, Ethereum ETFs won’t provide staking rewards for blockchain upkeep, a return that may be achieved by holding the token instantly.
“Ether doesn’t have the profile of Bitcoin,” mentioned Caroline Bowler, CEO of BTC Markets Pty. Bitcoin’s $1.4 trillion market cap is 3 times bigger than Ethereum’s. “It will not have the identical affect,” he mentioned.
Final month, the SEC unexpectedly pivoted to approving spot Ethereum ETFs after permitting Bitcoin funds following a courtroom reversal in 2023.
This determination briefly boosted the worth of Ethereum, however the token’s 109% rise final 12 months fell in need of Bitcoin’s 169% rise, which reached a document excessive in March.
JPMorgan strategists led by Nikolaos Panigirtzoglou estimate that potential Ether ETFs would entice a “modest” $1 billion to $3 billion in internet inflows over the rest of the 12 months.
These merchandise might battle to succeed in the 20% of Bitcoin ETF property within the U.S., which now complete $62.5 billion, in keeping with Bloomberg Intelligence Senior ETF Analyst Eric Balchunas.
*This isn’t funding recommendation.
