The highly anticipated launch of Ethereum(ETH)ETFs in the US might not be the blockbuster event some investors were expecting. While major players like BlackRock and Fidelity wait for final regulatory approval, analysts are predicting significantly lower demand compared to the wildly popular Bitcoin ETFs.
JPMorgan strategists project a modest $1-$3 billion in net inflows for Ethereum ETFs by year-end, a far cry from the $15.3 billion Bitcoin ETFs have attracted in just five months. This disparity can be attributed to several factors.
Firstly, Bitcoin enjoys a well-established narrative as “digital gold,” a safe-haven asset for investors. Ethereum, on the other hand, lacks that same brand recognition. Additionally, unlike Bitcoin ETFs, initial Ethereum offerings won’t offer staking rewards, a feature that incentivizes holding the token directly.
Caroline Bowler, CEO of BTC Markets Pty, emphasizes the gap between the two cryptocurrencies. Bitcoin’s market cap of $1.4 trillion dwarfs Ethereum’s at $466 billion, suggesting a potentially muted impact from Ethereum ETFs.
This muted reception comes despite a recent shift by the SEC, which greenlit spot Ethereum ETFs after initially approving Bitcoin versions due to a 2023 court ruling. While the news boosted Ether’s price, its gains haven’t matched Bitcoin’s impressive run.
However, not everyone shares the cautious outlook. Vetle Lunde of K33 Research predicts a more optimistic $4 billion in net inflows for Ethereum(ETH) ETFs in the first five months, potentially triggering a price surge. Fund manager VanEck, aiming for an Ethereum ETF launch, highlights the underlying Ethereum blockchain’s potential in crypto finance.
History offers some clues. The January launch of nine US Bitcoin ETFs initially caused a price dip. But strong demand eventually reversed the trend. A similar scenario could play out with Ethereum.
Also Read: Can Spot ETFs Launch Ethereum To $22,000 By 2030? VanEck Makes A Bold Call On The DeFi Leader
Meanwhile, Grayscale plans to convert its massive Ethereum(ETH) offering into an ETF, potentially creating selling pressure on the token in the short term. The long-term impact, however, remains uncertain.
As of now, Ethereum trades at $3,830, well below its 2021 peak of $4,866. Whether Ethereum ETFs can fuel a similar rally to Bitcoin’s remains to be seen. Only time will tell if the “flippening,” where Ethereum overtakes Bitcoin, becomes a reality.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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