Ethereum ETF Demand May Be Muted Compared To Bitcoin ETFs, Analysts Say

Zinger Key Points
  • Analysts are expecting lower demand for Ethereum as its prominence is not as broadly known and accepted.
  • The SEC’s recent shift towards approving spot Ethereum ETFs has not matched Bitcoin’s rapid 169% price surge over the past year.

The highly anticipated launch of Ethereum ETH/USD exchange-traded funds (ETFs) in the United States may see a more subdued response compared to the initial excitement surrounding Bitcoin ETFs, analysts predict.

What Happened: JPMorgan strategists, led by Nikolaos Panigirtzoglou, estimate that Ethereum ETFs will attract a modest $1 billion to $3 billion in net inflows by the year’s end, a stark contrast to the $15.3 billion garnered by Bitcoin ETFs, according to a Bloomberg report.

Ethereum’s 109% price increase over the past year lags behind Bitcoin’s 169% surge.

James Davies, CPO and founder of Crypto Valley Exchange, told Benzinga that analysts are expecting lower demand for Ether ETH/USD as its prominence relative to Bitcoin is not as broadly known and accepted by the public.”

Caroline Bowler, CEO of BTC Markets Pty, concurred, noting, “Ether doesn't have the profile of Bitcoin,” and emphasized Bitcoin's BTC/USD market value of $1.4 trillion, which is three times that of Ether.

SEC Approval Process

Davies is optimistic about the approval process under SEC Chair Gary Gensler, stating, “Everyone sees that ETH ETFs will pass very soon.”

He added that denial of these ETFs would likely lead to lawsuits, mirroring the legal actions seen with Bitcoin ETFs.

Marko Jurina, CEO of Jumper.Exchange, also expects approval, saying, “Chances of issuance are imminently favorable,” given recent regulatory developments.

Long-Term Advantages Of Ethereum ETFs

Despite the expected lower demand, Ethereum ETFs offer unique benefits.

“ETH has utility mostly not present in the Bitcoin ecosystem, so much of the overall crypto ecosystem is tied to ETH,” Davies noted, suggesting significant long-term growth potential.

VanEck's Head of Digital-Asset Research, Matthew Sigel, supported this view, stating, “Over time, we expect investors to conclude that the potential for application and innovation within the Ethereum ecosystem could be much larger than that of Bitcoin.”

Also Read: JPM - Benzinga">JPMorgan: US Crypto Regulations Signal Opposition To CBDCs And Non-Compliant Stablecoins

Potential Selling Pressure And Market Dynamics

Concerns remain about selling pressure from Grayscale's planned conversion of its $11 billion Ethereum fund into an ETF.

Davies warned, “The potential ‘selling pressure’ on Ether from redemptions in Grayscale’s Ethereum fund could be significant.”

However, he also noted that net inflows to BTC ETFs could potentially offset this pressure.

Broader Investor Sentiment

Ether continues to trade below its all-time high of $4,866, with global investors showing less enthusiasm compared to Bitcoin.

ByteTree Asset Management's Charlie Morris observed, “Global investors have been less enthusiastic about Ether, which they have had access to through Europe and Canada for years.”

The implications of these developments and broader trends in digital asset investments will be a key topic at the Benzinga Future of Digital Assets event on Nov. 19.

Industry leaders will provide valuable insights into how these strategic moves and regulatory changes are shaping the future of the cryptocurrency market.

Read Next: Is Robinhood’s Crypto Exchange Deal Really ‘Massive’ And The ‘First Domino To Fall?’

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