Ethereum
Why Ethereum ETFs Might Not Be as Successful as Bitcoin ETFs
The recent green light for Ethereum Spot ETF has shaken up the crypto world, but not everyone is convinced it’s a game-changer. Eric Balchunas of Bloomberg Intelligence predicts that Ethereum ETFs may acquire only a fraction, around 10-15%, of the assets that Bitcoin ETFs have taken in.
Will Ethereum disappoint investors, or is there more to the story? Dive in to find out!
Institutional interest: Ethereum versus Bitcoin
Comparing the institutional appeal of Ethereum to that of Bitcoin reveals a stark difference. Researcher Noelle Acheson points out that the largest Ethereum futures ETF (EETH) only manages 4% of the assets of its Bitcoin counterpart (BITO). This tells us that Ethereum is not getting the same love from institutional investors.
When Bitcoin spot ETFs were approved in January, a significant influx of institutional investment was seen, propelling the Bitcoin price to new highs. According to analyst Hildobby, institutions purchased more than $12 billion in financial securities. Bitcoin after ETF approvals. Investors in Ethereum may not benefit from the same renewed interest.
Acheson points out that the regulatory status of Ethereum remains unclear. Although Ethereum has been mentioned in lawsuits as a commodity, the SEC has not clearly defined it, making investing in the asset even more complicated.
Managing expectations: what to anticipate
Balchunas and his colleague James Seyffart had previously increased the chances of one-time approval of the Ethereum ETF to 75% due to pro-crypto developments in the United States. Balchunas, however, expects the launch of Ethereum ETFs to be disappointing compared to Bitcoin.
“When/if spot ETH ETFs eventually launch, we should prepare for a disappointing reception,” Acheson wrote in his newsletter, “Crypto is Macro.” Acheson attributed this to traditionally lower institutional interest in Ethereum-based products in the United States and abroad.
Review of global trends
In Hong Kong, Ethereum represents less than 15% of spot ETF assets under management; a similar trend in which institutional interest has been largely muted. The US market, where investors already have access to Ethereum futures ETFs, is also showing a lack of enthusiasm.
“THE [assets under management] of the main ETH futures ETF (EETH) is approximately 4% of that of the main BTC futures ETF (BITO)”,
Acheson
Looking forward
Some voices within the industry remain optimistic about the future of Ethereum. Investor Jim Bianco suggests that removing regulatory uncertainty around Ethereum’s proof of stake could lead to significant institutional investment.
Although the approval of the Ethereum ETF is an important milestone, its impact on institutional investments is still unclear. Balchunas and others warn against waiting for a Bitcoin-like surge. As the market grapples with these changes, Ethereum and other altcoins are in play.
Also discover: Ethereum ETF approved what this means for Bitcoin and Altcoins