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- Analysts predict that spot Ethereum ETFs might not see the same level of interest as Bitcoin ETFs, citing lower institutional demand for Ethereum.
- Analysts anticipate a tepid reception based on current investor behavior and existing Ethereum-based product performance.
The entire crypto market seemed to be very much excited about the arrival of the spot Ethereum ETF this week, which finally received the go-ahead from the U.S. SEC. While the ETH price rallied 25% and above in anticipation of the approval, it hasn’t much moved after the official announcement, as reported by Crypto News Flash.
Note that the U.S. SEC has approved the 19b-4 filings of the spot Ethereum ETF and it is still reviewing the S-1 registrations. Thus, it’s a matter of a few more weeks before the spot Ether ETFs begin to trade on exchanges, per the Crypto News Flash report.
While the Bitcoin ETFs witnessed massive inflows after going live in January 2024, the same might not be the case for the spot Ethereum ETFs, as per some analysts. Noelle Acheson, former head of market insights for Genesis Global Trading, said that the institutional demand for Ethereum is much less in comparison to that for Bitcoin.
Moreover, ETF analyst Eric Balchunas from Bloomberg Intelligence anticipates that Ethereum ETFs will represent “10-15% of the assets of the BTC ETFs.” For some time, the SEC has resisted the approval of spot crypto ETFs, citing concerns about their susceptibility to manipulation. It has been vehemently defending that Ethereum (ETH) be treated as a ‘security’. However, the recent decision has proved that the U.S. regulators view Ethereum more like a commodity.
Spot Ethereum ETFs Can See Disappointing Reception
In her latest newsletter, Crypto Is Macro, Acheson wrote “When/if the ETH spot ETFs eventually launch, we should brace ourselves for a disappointing reception”.
Part of the reason for this is the lack of enthusiasm among institutional investors for current Ethereum-based offerings. In Hong Kong, where spot Bitcoin and Ethereum ETFs were greenlit last month, Ethereum constitutes less than 15% of the assets under management, as highlighted by Acheson.
On the other hand, in the United States, investors already have options like Ethereum futures ETFs available to them. However, their interest in these offerings is relatively low. The [assets under management]of the leading ETH futures ETF (EETH) is around 4% that of the leading BTC futures ETF (BITO),” Acheson writes.
She further adds that a similar lack of institutional interest also appears for the spot Ethereum ETF. “The CME is the largest BTC derivatives platform in the market, in terms of open interest. But it ranks only fifth in ETH derivatives. US institutional investors are maybe just not really into the ETH narrative?” added Acheson.
However, not every analyst is bearish about spot Ether ETFs. Standard Chartered Bank analyst Geoffrey Kendrick stated that he expects the ETFs to go live next month and record inflows worth $15-$45 billion within the first 12 months. He also expects the ETH price to trade at $8,000 by the year-end.
