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Bloomberg ETF analyst James Seyffart believes ethereum spot ETFs could see 20% to 25% of the demand experienced by bitcoin spot ETFs.
Seyffart expressed his stance in an interview hosted by Bitwise, adding that fellow Bloomberg ETF analyst Eric Balchunas believes the new funds will serve between 15% and 20% of demand.
Seyffart compared both estimates to the fact that eth holds about 30% of bitcoin's $1.4 trillion market cap, and called his estimate a “discount” in that regard.
He attributed the difference to certain limitations of each product. eth ETF issuers will not engage in staking, meaning that unlike eth holders, ETF investors cannot earn returns. Additionally, ethereum has higher on-chain utility than bitcoin and ETF investors will not be able to access it.
Seyffart stated:
“…The gap between Ether as an ETF and Ether itself… is a bit wider than the gap between bitcoin and bitcoin as an ETF wrapper.”
Seyffart said that ethereum futures ETFs, which hold only 12% of the assets compared to futures ETFs in the US, do not provide a “good sample” for an estimate. eth futures ETFs in foreign markets have 20% to 30% assets in proportion to bitcoin futures ETFs.
Ultimately, Seyffart predicted that eth spot ETFs would have “big launches,” but not as big as bitcoin spot ETF launches. “There will be demand,” he concluded.
Bitwise CIO expects significant demand
Bitwise CIO Matt Hougan predicted “significant demand” for ethereum spot ETFs.
Hougan said the demand will likely come from two sources. First, he suggested that many investors treat diversification as a “critical starting point.”
He predicted that “many investors,” but “not a majority,” would initially pursue a diversification strategy. Hougan also suggested that commitment could increase over time, with most professional investors wanting diversified exposure within five years.
Hougan said:
“(Investors) don't want to own a single stock. They don't want to own a single bond. Why would they only own one crypto asset?
Second, Hougan said ethereum's role as a “high-growth technology investment” will attract investors, citing “killer applications” such as stablecoins, non-fungible tokens, DeFi, gaming and social applications.
eth ETFs Gained Initial Approval
The US SEC approved several changes to rules 19b-4 on May 23, which will allow exchanges to list and trade several pending spot eth ETFs.
One proposal that gained approval was the filing of NYSE Arca on behalf of Bitwise's proposed fund.
The SEC still must handle each company's S-1 registration statements.
The release date is unclear. Seyffart believes launches will occur in weeks or more. JP Morgan believes the products will be launched before November.
