JPMorgan analysts estimate that demand for Ethereum spot ETFs could be much lower than that seen for Bitcoin ETFs.
The US bank, which published an optimistic report on the future of Ethereum in late 2023, believes that the absence of staking in Ethereum spot ETFs will make these investment products less attractive to investors than those of its counterpart, Bitcoin.
Bitcoin had an advantage over Ethereum in the spot ETF market
Ethereum ETFs received regulatory approval in the United States in April. However, none of these funds are trading on stock exchanges at the moment, as the issuers are still finalizing details with the agency that regulates the country's financial markets, the Securities and Exchange Commission (SEC), for their official launch.
Although JPMorgan analysts believed in January that these investment funds would not be approved this year, the SEC gave the green light to 19b-4 filings, which allow stock exchanges to list spot ETFs that will be traded on the market. Now, the SEC must approve the S-1 filings of Ethereum fund issuers, for these investment vehicles to finally begin trading on the market.
Analysts estimate that the SEC could approve these filings by mid-July. However, they expect demand for them to be much lower than that experienced by Bitcoin ETFs.
Last week, Nikolaos Panigirtzoglou published a report stating that the absence of staking in these funds will make them less attractive compared to other platforms where investors have the opportunity to generate returns with ETH. The analyst also believes that the approval of Bitcoin exchange-traded funds in January gave the cryptocurrency a competitive advantage in investment markets. He argued that Bitcoin has gained a huge ground in the markets as a main competitor to gold and that the value proposition of the Ethereum network, which is focused on smart contracts, is very different from that of its biggest rival.
Based on the above, Panigirtzoglou believes that once Ethereum spot ETFs begin trading on the market, they could attract around $3.000 billion in inflows in their first year of life, which would represent around 20% of the net inflows that Bitcoin spot ETFs currently record.
Grayscale more optimistic about Ethereum spot ETFs
Analysts at Grayscale Investments, one of the firms that was approved by the SEC to operate an Ethereum spot ETF in the US market, are becoming a little more optimistic about the future of ether-based funds.
Reciente en un report, noted that Ethereum ETFs could attract around $4.000 billion in their first 4 months. This prediction is based on the fact that Ethereum’s value proposition will attract investors interested in exploring the use cases and applications of the innovative blockchain technology. The firm’s analysts said that Ethereum “is a decentralized computing platform that hosts a rich ecosystem of applications,” and that the existence of ecosystems such as decentralized finance and NFT tokens on this network expose part of its enormous potential. In relation to Bitcoin, they highlighted the attractiveness of this cryptocurrency as an investment asset and long-term store of value.
However, Grayscale analysts also noted that staked ETH is currently likely not available for spot ETFs and that despite their attractiveness and potential, demand for these investment vehicles is likely to be 25% to 30% of that seen for Bitcoin ETFs. Additionally, JPMorgan noted the risk of profit-taking by speculative investors in the Grayscale Ethereum Trust (ETHE), which would drive both outflows from the fund and a decline in the value of the fund. ETH price short term.
Finally, other analysts, such as those at VanEck, believe that the approval of these exchange-traded funds has marked a turning point for the cryptocurrency, which is considered a security by the SEC. Regulatory approval of these funds is likely to push the price of ETH above $20.000 by 2030, the analysts said.
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