ETFs
Why one analyst thinks Ethereum ETFs will be “disappointing” – DL News
- Institutions have been gobbling up Bitcoin after spot Bitcoin ETFs were approved.
- They might not show the same interest in Ethereum, according to researcher Noelle Acheson.
Bitcoin reached new highs just weeks after the U.S. Securities and Exchange Commission approved Bitcoin spot exchange-traded funds.
The move allowed institutions to gobble up more than $12 billion in original cryptocurrency, according to data by the pseudonymous analyst Hildobby.
Ethereum investors may not be so lucky.
Several indicators suggest that institutional interest in Ethereum is much lower than that in Bitcoin, according to researcher Noelle Acheson, former head of market research for Genesis Global Trading.
She is not the only pessimist.
Eric Balchunas, ETF analyst at Bloomberg Intelligence waits Ethereum ETFs will represent “10-15% of BTC ETF assets.”
The SEC has long fought against approving spot crypto ETFs, arguing that they are vulnerable to manipulation.
After losing a lawsuit brought by crypto asset manager Grayscale Investments, the SEC capitulated in January with the approval of 11 Bitcoin spot ETFs.
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Nonetheless, it had signaled that it would decline requests for Ethereum spot ETFs.
That changed this week, amid a wave of pro-crypto developments in the United States.
On Monday, Balchunas and his colleague James Seyffart updated their chances of Ethereum ETF spot approval from 25% to 75%.
This approval came on Thursday, but the real launch maybe in weeks or months. And whether that drives Ethereum to its own all-time high is another matter.
“When/if spot ETH ETFs eventually launch, we should prepare for a disappointing reception,” Acheson wrote in its newsletter, Crypto is a macro.
This is partly because institutional investors have shown little interest in existing Ethereum-based products.
In Hong Kong, which last month approved Bitcoin and Ethereum spot ETFs, Ethereum represents less than 15% of assets under management, Acheson notes.
In the United States, investors already have access to Ethereum futures ETFs. And they’re not very interested.
“THE [assets under management] of the leading ETH futures ETF (EETH) is approximately 4% of that of the leading BTC futures ETF (BITO),” Acheson writes.
As for the Ethereum spot ETF itself, available data suggests that institutional interest may be lacking there as well.
“The CME is the largest BTC derivatives platform on the market, in terms of open interest,” Acheson writes.
“But it only ranks fifth among ETH derivatives. Perhaps US institutional investors just aren’t really interested in the ETH narrative?
Certainly, open interest in Bitcoin was highest on Binance, with CME taking the top spot just before spot Bitcoin ETFs were approved in January.
There is evidence that this is already happening with Ethereum: CME was in sixth place at the start of the week.
And Wall Street executives have repeatedly said they see potential in Ethereum.
“Remove regulatory uncertainty around proof of stake and watch how Wall Street moves toward ETH,” investor Jim Bianco written thereferring to the method Ethereum uses to confirm transactions and create new coins.
“It’s a whole ecosystem with borrowing, lending, insurance, tokenomics, staking (yield), stablecoins, NFTS, primitives, L2, and so on. There are a lot of things they can work with here, instead of just keeping one coin,” he said.
Crypto market players
- Bitcoin is down 3.2% to $67,297 over the past 24 hours.
- Ethereum is down 3.4% at $3,679.
What we read
Aleks Gilbert is a DeFi correspondent based in New York. Do you have any advice? You can contact him at aleks@dlnews.com.