JPMorgan analysts have expressed skepticism regarding the potential success of spot Ethereum ETFs, suggesting they may not garner significant interest due to their similarities with existing Bitcoin ETFs. The team led by Nikolaos Panigirtzoglou highlighted these concerns in their recent “Flows and Liquidity” report.
Why Might Spot Ethereum ETFs Underperform?
According to the report, the launch of spot Ethereum ETFs is unlikely to replicate the success of spot Bitcoin ETFs. When BlackRock and Fidelity introduced their Bitcoin ETFs, they quickly amassed $10 billion in assets under management, setting new records. However, JPMorgan analysts believe that spot Ethereum ETFs won’t see a similar influx of investments.
What Factors Limit Ethereum ETFs?
One primary reason cited is Bitcoin’s first-mover advantage, which means a significant portion of demand has already been captured by Bitcoin ETFs. Additionally, the exclusion of Ethereum staking features in the filing documents for spot ETFs puts them at a competitive disadvantage compared to platforms offering staking returns.
Key Insights for Investors
- Spot Ethereum ETFs may attract significantly less investment compared to Bitcoin ETFs.
- Bitcoin’s early market presence continues to dominate investor interest.
- Ethereum ETFs lacking staking features are less appealing to investors.
- Potential net inflows for Ethereum ETFs could reach $1 billion to $3 billion in 2024.
Given these factors, JPMorgan’s calculations predict that if spot Ethereum ETFs begin trading before the end of the year, they could see a volume of $1 billion to $3 billion in net inflows throughout 2024. This estimate underscores the cautious optimism surrounding Ethereum ETFs in comparison to their Bitcoin counterparts.
Historically, spot Bitcoin ETFs have seen substantial inflows, with assets under management hitting $59 billion by May 30. Analysts argue that Ethereum ETFs might experience a similar pattern but on a smaller scale. They anticipate around $1 billion to exit the Grayscale Ethereum Trust shortly after the ETFs launch due to speculative investors who might take profits, potentially applying downward pressure on Ethereum prices.