Bitcoin
Why Ethereum ETFs May Not Be as Successful as Bitcoin ETFs
The recent green light for Ethereum spot ETFs has shaken up the crypto world, but not everyone is convinced it’s a game changer. Eric Balchunas of Bloomberg Intelligence predicts that Ethereum ETFs may only capture a fraction, around 10-15%, of the assets that Bitcoin ETFs bag.
Will Ethereum disappoint investors or is there more to the story? Dive in to find out!
Institutional interest: Ethereum vs. Bitcoin
Comparing the institutional appeal of Ethereum with that of Bitcoin reveals a big difference. Researcher Noelle Acheson highlights that the largest Ethereum futures ETF (EETH) manages just 4% of the assets of its Bitcoin counterpart (BITO). This tells us that Ethereum is not getting the same love from institutional investors.
When spot Bitcoin ETFs were approved in January, a large influx of institutional investment was seen, driving the price of Bitcoin to new highs. According to analyst Hildobby, institutions purchased more than US$12 billion in Bitcoin after ETF approvals. Ethereum investors may not get the same boost in interest.
Acheson points out that Ethereum’s regulatory status remains uncertain. Although Ethereum has been mentioned in court filings as a commodity, the SEC has not clearly defined it, making investing in the asset even more complicated.
Managing expectations: what to anticipate
Balchunas and his colleague James Seyffart had already increased the approval chance of a spot Ethereum ETF to 75% due to pro-crypto developments in the US. Balchunas, however, expects the launch of Ethereum ETFs to be disappointing compared to Bitcoin.
“When/if ETH spot ETFs eventually launch, we should prepare for a disappointing reception,” Acheson wrote in his newsletter, “Crypto is Macro.” Acheson attributed this to traditionally lower institutional interest in Ethereum-based products in the US and abroad.
Examining Global Trends
In Hong Kong, Ethereum represents less than 15% of assets under management for spot ETFs; a similar trend in which institutional interest has largely been subdued. The US market, where investors already have access to Ethereum futures ETFs, also shows a lack of enthusiasm.
“O [assets under management] of the main ETH futures ETF (EETH) is about 4% of the main BTC futures ETF (BITO)”,
Acheson
Looking to the future
Some voices within the industry remain optimistic about the future of Ethereum. Investor Jim Bianco suggests that removing regulatory uncertainty around Ethereum proof-of-stake could bring significant institutional investment.
While the approval of the Ethereum ETF is a milestone, its impact on institutional investment is still unclear. Balchunas and others warn against expecting a Bitcoin-like surge. As the market grapples with these changes, Ethereum and other altcoins are in play.
Also check out: Ethereum ETF Approved What This Means for Bitcoin and Altcoins