Fri June 7, 2024 ▪
4
min reading ▪ acc
In the dynamic world of cryptocurrencies, exchange-traded funds (ETFs) represent a significant step forward for institutional adoption and mainstream investing. Recently, attention has turned to Ethereum (ETH) ETFs, which analysts believe may see more muted demand compared to their Bitcoin (BTC) counterparts.
Crypto: Ethereum ETFs Are Less Attractive Than Bitcoin ETFs!
JPMorgan strategists led by Nikolaos Panigirtzoglou estimate that Ethereum ETFs could attract between $1 billion and $3 billion in net inflows by the end of the year. In stark contrast to the $15.3 billion accumulated by Bitcoin ETFs. This modest forecast reflects the less widespread recognition and adoption of ETH compared to crypto BTC, which has seen a rapid 169% increase in price over the past year.
James Davies, CPO and founder of Crypto Valley Exchange, points out that demand for Ether may be lower due to its less established relative awareness. Caroline Bowler, CEO of BTC Markets Pty, adds, noting that “Ether doesn’t have the profile of Bitcoin,” highlighting BTC’s market value of $1.4 trillion, three times that of Ether.
Long-term outlook for Ethereum
Despite the less enthusiastic expectation, Ethereum ETFs offer unique advantages. “ETH has a utility that is largely missing from the Bitcoin ecosystem, so a large part of the overall crypto-ecosystem is tied to ETH,” says Davies, suggesting significant long-term growth potential. Matthew Sigel, head of digital asset research at VanEck, supports this view, saying that “over time, we expect investors to conclude that the potential for applications and innovation within the Ethereum ecosystem could be much greater than that of Bitcoin.”
But concerns remain about potential selling pressure from Grayscale’s planned $11 billion Ethereum fund conversion to an ETF. Davies warns that “selling pressure” on Ether from buybacks in Grayscale’s Ethereum fund could be significant. However, he also notes that net inflows into BTC ETFs could potentially offset this pressure.
Finally, while the demand potential for Ethereum ETFs appears promising, they are expected to attract significantly less interest compared to Bitcoin ETFs. Factors such as the lack of staking rewards and differences in the perception of the crypto market contribute to this outlook.
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The world is evolving and adaptation is the best weapon to survive in this wavy universe. Essentially a crypto community manager, I am interested in anything directly or indirectly related to blockchain and its derivatives. To share my experiences and raise awareness of a field that fascinates me, there is nothing better than writing articles that are both informative and relaxing.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.