Ethereum
Ethereum ETFs brace for slow reception, JPMorgan expects modest inflows of $1-3 billion
According to a Bloomberg report, analysts suggest that the debut of the recent approved Ethereum ETFs in the United States may generate significantly less demand than spot-Bitcoin products. Major financial institutions, including BlackRock and Fidelity, are awaiting final approvals from the Securities and Exchange Commission (SEC) to list the long-awaited Ethereum funds.
However, JPMorgan strategists predict much smaller net inflows into Ethereum ETFs than the $15.3 billion flowing into Bitcoin vehicles this year.
Analysts divided on the potential of Ethereum ETFs
According to report, the success of the five-month-old Bitcoin ETFs can be attributed to a controversial narrative that presents Bitcoin as digital gold, a concept that Ether lacks. Additionally, Ether funds will not offer staking rewards for maintaining the blockchain, a feature available to those who hold the token directly.
Caroline Bowler, CEO of BTC Markets Pty, points out that ETH does not have the same profile as Bitcoin. Bitcoin’s market value of $1.4 trillion is three times that of Ether. This discrepancy indicates that Ethereum ETFs in the United States may not have a comparable impact.
In a surprising change, the SEC recently signaled its willingness to approve Ethereum spot ETFs, following its earlier acceptance of Bitcoin Fund due to a court reversal in 2023. While this development has boosted Ether’s price, its 109% gains over the past year still lag behind Bitcoin’s 169% rise , including its March record.
JPMorgan strategists led by Nikolaos Panigirtzoglou estimate that future Ether wallets will attract between $1 billion and $3 billion in “modest” net inflows for the remainder 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 in Bitcoin ETF assets in the United States.
Despite these reservations, Vetle Lunde, senior research analyst at crypto specialist K33 Research, remains optimistic, forecasting $4 billion in revenue. net collection in the first five months for Ethereum ETFs and a significant “supply absorption shock” that could push the price of ETH higher.
VanEck bullish on Ethereum
Fund manager VanEck, which aims 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 assets research at VanEck, believes that investors will eventually recognize the greater potential for application and innovation within the Ethereum ecosystem than Bitcoin.
It is worth noting that the launch of nine new US Bitcoin ETFs on January 11 initially caused a drop in prices. The price of Bitcoin, coupled with outputs from the Grayscale Bitcoin Trust. However, strong demand for new ETFs eventually overshadowed 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. Although Grayscale fund redemptions may create selling pressure on ETH, the overall impact on the market remains uncertain.
At the time of writing this article, ETH was trading at $3,830, while Bitcoin continues to approach its all-time highs of $73,7000 reached in March. Ether is still far from its all-time high of $4,866, reached during the 2021 bull run.
Featured image of DALL-E, chart by TradingView.com