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Ether Spot ETFs Could See Up to $5.4B of Net Inflows in First 6 Months: Citi

Jul 15, 2024
  • Ether spot ETFs net inflows are likely to be 30%-35% of bitcoin equivalents, the report said.
  • Citi said this gives a range of $4.7 billion-$5.4 billion of potential net inflows into ether ETFs over six months.
  • Flows could underwhelm due to a lack of staking and bitcoin’s first-mover advantage, the bank said.
As a seasoned financial analyst with a deep understanding of the cryptocurrency market and its intricacies, I believe that the net inflows into Ether spot Exchange-Traded Funds (ETFs) in the U.S. are likely to be significantly lower than those for Bitcoin ETFs. Based on Citi’s recent report, we can expect net inflows of around 30%-35% of Bitcoin equivalents, translating to a range of $4.7 billion to $5.4 billion over six months.Last week, Citi researchers predicted that the inflow of investments into ethereum (ETH) exchange-traded funds (ETFs) in the U.S. might be approximately 30%-35% as large as those for bitcoin (BTC) ETFs. Additionally, they suggested that a larger percentage of these Ethereum ETF investments could result in withdrawals or sales rather than new investment.

The report estimates that there will be net inflows ranging between $4.7 and $5.4 billion over a six-month period for that level, it added. However, the report also cautions that the actual inflows and the correlation of ether returns with these flows might be less than indicated in the analysis.

Analysts headed by Alex Saunders explain that although Ethereum (ETH) could potentially provide diverse advantages in the future due to its broader range of applications, it does not do so presently.

Ether Exchange-Traded Funds (ETFs) will soon be accessible for trading in the United States following the SEC’s approval of applications submitted by issuers earlier this year. Trading is predicted to commence within the upcoming week.

According to Citi, investors who are considering purchasing spot Exchange-Traded Funds (ETFs) instead of the actual cryptocurrencies might consider bitcoin and ethereum as interchangeable assets. Consequently, they could allocate resources between these two cryptocurrencies rather than treating them as unique investments. This could potentially result in ether receiving funds intended for bitcoin ETFs, instead of new allocations.

The bank pointed out that another potential cause of underperformance in ethereum spot ETFs is insufficient staking.

As a researcher studying the cryptocurrency market, I can share that Bitcoin has been capitalizing on its first-mover advantage. This benefit led to substantial investments totaling billions of dollars flowing into Bitcoin before the Ethereum ETF received approval for listing in May. Consequently, BTC outperformed other digital assets during this period.

Despite the current challenges, there’s a silver lining. The launch of spot ETFs for ethereum could coincide with a more accommodative Federal Reserve, leading to lower interest rates, a robust equity market, and a depreciating U.S. dollar. Such an economic climate might prove favorable for the crypto sector.

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2024-07-16 12:32