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According to statements made by JPMorgan analysts, spot Ethereum ETFs may not attract the expected interest due to their similarity to existing Bitcoin ETFs.
Spot Ethereum ETFs May Fall Short of Expectations
Nikolaos Panigirtzoglou’s team stated in the 25-page “Flows and Liquidity” report presented on Thursday, where ETH occupied less than a single page.
The initial market reaction to the launch of spot Ethereum ETFs will likely be negative. Spot Ethereum ETFs will not see the kind of inflows that spot Bitcoin ETFs experienced when they were launched. BlackRock and Fidelity’s second-category products each accrued $10 billion in assets under management within a few weeks, setting records.
JPMorgan analysts also added the following statement:
We believe that the demand for spot Ethereum ETFs will be much lower than that for spot Bitcoin.
The team also explained why Spot Ethereum ETFs cannot compete with Bitcoin ETFs.
The first point highlighted was Bitcoin’s advantage of being the first. Therefore, even if Spot Ethereum ETF approval is granted, most of the demand has already been met by Bitcoin.
JPMorgan analysts emphasized another important point. They noted that the removal of the staking feature from Ethereum ETFs, as per the filings, leaves them at a disadvantage compared to platforms that offer staking returns.
JPMorgan’s calculations indicated that if the ETF starts trading before the end of the year, it could reach a volume of $1 billion to $3 billion in net inflows throughout the rest of 2024.
Spot Bitcoin ETF Process May Repeat
To review, according to data provided by The Block, the assets under management for spot Bitcoin ETFs were at $59 billion as of May 30. When spot Bitcoin ETFs began trading on January 10, Grayscale Bitcoin Trust’s AUM was at $28.7 billion. Grayscale Ethereum Trust’s AUM was at $11 billion as of Thursday.
Analysts warned that, similar to Grayscale’s Bitcoin product, Ethereum ETFs might experience similar inflows once they start trading.
We expect approximately $1 billion to exit Grayscale Ethereum Trust shortly after the launch of spot Ethereum ETFs, due to speculative investors who previously bought ETHE in anticipation of it being converted to an ETF taking profits, thereby putting downward pressure on Ethereum prices.
