According to a Bloomberg report, analysts suggest that the debut of the recently approved ethereum ETFs in the US may generate significantly less demand than spot bitcoin products. Major financial institutions including BlackRock and Fidelity are awaiting final approval from the Securities and Exchange Commission (SEC) to list the long-awaited ethereum funds.
However, JPMorgan strategists anticipate much smaller net inflows into ethereum ETFs than the $15.3 billion that will flow into bitcoin vehicles this year.
Analysts Divided on the Potential of ethereum ETFs
According to him eth-etf-demand-pose-test-for-second-largest-token” target=”_blank” rel=”noopener nofollow”>report, the success of the five-month-old bitcoin ETF can be attributed to a controversial narrative that presents bitcoin as digital gold, a concept that Ether lacks. Additionally, Ether pools will not offer rewards for maintaining the blockchain, a feature available to those who own the token directly.
Caroline Bowler, CEO of btc Markets Pty, highlights that eth lacks the same profile as bitcoin. bitcoin's market value of $1.4 trillion is three times that of Ether. This discrepancy indicates that US ethereum ETFs may not have a comparable impact.
In a surprising reversal, the SEC recently signaled its willingness to approve ethereum spot ETFs, following its previous acceptance of bitcoin funds due to a court reversal in 2023. While this development boosted Ether's price, its 109% gains over the past year still lag bitcoin's 169% rise, including its all-time high in March.
JPMorgan Strategists directed by Nikolaos Panigirtzoglou They estimate potential Ether portfolios will attract between $1 billion and $3 billion in “modest” net inflows over the rest of the year.
However, as Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, reports, these products may struggle to capture 20% of the current $62.5 billion bitcoin ETF assets in the United States.
Despite these reservations, Vetle Lunde, senior research analyst at crypto specialist K33 Research, remains optimistic and predicts $4 billion in net receipts in the first five months for ethereum ETFs and a major “supply absorption shock” that could boost the price of eth.
VanEck is bullish on ethereum
Fund manager VanEck, who intends to launch an ethereum ETF, sees potential in the popularity of the ethereum blockchain underlying the token, particularly for applications in crypto financial services.
Matthew Sigel, head of digital asset research at VanEck, believes investors will eventually recognize the greater application and innovation potential within the ethereum ecosystem than bitcoin.
It is worth noting that the launch of nine new US ETFs for bitcoin on January 11 initially caused a drop in The price of bitcoin, along with departures from Grayscale bitcoin Trust. However, the strength of demand for the new ETFs eventually eclipsed these concerns and bitcoin resumed its upward trajectory.
Similarly, asset manager Grayscale plans to convert its $11 billion ethereum offering into an ETF, similar to its bitcoin fund. While the Grayscale fund redemptions may create selling pressure on eth, the overall impact on the market remains unclear.
At the time of writing this article, eth was trading at $3,830, while bitcoin continues to approach its record levels of $73,7000 reached in March. Ether is still some distance from its all-time high of $4,866, reached during the 2021 bull run.
Featured image of DALL-E, chart from TradingView.com
