Ethereum ETFs Analysis
According to a recent research report by Citi, spot Ethereum (ETH) exchange-traded funds (ETFs) in the United States are expected to receive net inflows at approximately 30%-35% of the levels seen for Bitcoin (BTC) ETFs. This estimation amounts to a range of $4.7 billion to $5.4 billion in net inflows over a six-month period. The report suggests that the distribution of these inflows may lean towards the lower end of this range.
The analysts at Citi highlighted that despite Ethereum’s potential diversification benefits in the long run due to its broader utility compared to Bitcoin, this aspect is not yet fully realized in the current market. As spot Ethereum ETFs are set to debut in the U.S. following regulatory approvals earlier in the year, they are expected to commence trading very soon.
Investors who opt for spot ETFs over holding the actual tokens may perceive Bitcoin and Ethereum as similar enough to divide their investments between the two, potentially limiting the additional inflows Ether ETFs could attract. The absence of staking options in Ethereum spot ETFs is identified as another factor that could hinder significant inflows.
Citi also noted that Bitcoin’s established position as a pioneer in the cryptocurrency space has already attracted substantial investments and performed well even before Ethereum ETF listings were approved. However, there is optimism in the market regarding the potential support for cryptocurrencies like Ethereum, especially with the Federal Reserve indicating a dovish stance, which could lead to a favorable macroeconomic environment characterized by lower interest rates, a robust equity market, and a weaker U.S. dollar.
Overall, while the initial expectations for Ethereum ETF inflows might be modest compared to Bitcoin, the evolving landscape and macroeconomic conditions could still provide a supportive backdrop for the growth of Ethereum ETFs in the U.S. market.