Ether Spot ETFs to See Much Lower Demand Than Bitcoin Versions, JPMorgan Says

JPMorgan predicts that exchange-traded funds (ETFs) based on ethereum spot prices could draw in up to $3 billion in new investments this year. If these ETFs allow staking, which is a method of actively participating in the validation of transactions on a blockchain network, then the potential inflows could reach as much as $6 billion, according to JPMorgan’s estimation.

As a crypto investor, I can tell you that Bitcoin held the advantage of being the first cryptocurrency to enter the market, which may have filled the overall demand for digital assets upon news of spot Bitcoin ETF approvals. Analysts, including Nikolaos Panigirtzoglou and his team, expressed this perspective in their report.

Ether exchange-traded funds (ETFs) are on the brink of being launched in the US, following the SEC’s approval of essential regulatory documents from applicants last week. However, they have not been given the green light to start trading just yet, as the SEC still needs to give its seal of approval to their S-1 filings for that to happen. Bitcoin ETFs commenced trading in January.

The Bitcoin reward reduction in April served as an extra trigger for demand towards Spot Bitcoin ETFs, according to the report. However, there seems to be no comparable incentive for Ethereum in the future. Furthermore, the absence of staking options for authorized Spot Ethereum ETFs makes these investment vehicles less enticing compared to other platforms that provide staking returns.

In simpler terms, the authors explained that Ether functions differently than Bitcoin when it comes to investing. Bitcoin is more widely sought after as it offers competition to traditional assets like gold for portfolio diversification.

Institutional investors might find the spot ETFs for ether less attractive compared to those of a larger rival due to the bank’s observation that these products have fewer liquid assets and lower amounts managed.