The anticipation surrounding the potential launch of Ethereum spot ETFs may be met with disappointment, according to Bloomberg ETF analyst Eric Balchunas. While Bitcoin spot ETFs have seen significant success in the United States, with over $7 billion in net flows since their launch, Balchunas believes that Ethereum ETFs will not come close to their Bitcoin counterparts in terms of popularity and demand.
Before the launch of Bitcoin spot ETFs, asset managers engaged in a legal battle with the Securities and Exchange Commission (SEC) to gain approval. The approval process was arduous due to concerns about market manipulation in the Bitcoin space. Despite these challenges, Grayscale, BlackRock, and Fidelity successfully launched Bitcoin spot ETFs, paving the way for potential Ethereum ETFs.
While the SEC may ultimately approve Ethereum spot ETFs, there are doubts regarding market demand for this product. Ethereum futures ETFs, launched in October of last year, did not generate significant flows or volume compared to Bitcoin futures ETFs. Additionally, the Purpose Ether ETF in Canada has a much smaller AUM compared to the company’s Bitcoin ETF, reflecting potential differences in investor interest between Ethereum and Bitcoin.
A survey conducted among registered investment advisors revealed that 71% of advisors favored Bitcoin over Ethereum. Additionally, the global market cap of Ethereum is substantially lower than that of Bitcoin, suggesting that Ethereum may be less popular as an investment option within an ETF wrapper. This disparity in market cap and advisor preferences could impact the reception of Ethereum spot ETFs in the marketplace.
While the launch of Ethereum spot ETFs may be on the horizon, the outlook for these products appears to be less promising compared to the success of Bitcoin spot ETFs. Factors such as market demand, legal battles, and investor sentiment all contribute to the uncertainty surrounding the potential launch of Ethereum ETFs. As the crypto market continues to evolve, only time will tell whether Ethereum spot ETFs can live up to the hype and generate significant interest among investors.
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