Analyst Predicts Ethereum Spot ETFs To Attract 25% Of BTC Demand – Here’s Why

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As an experienced financial analyst, I’ve closely followed the development of digital asset-backed Exchange Traded Funds (ETFs) and their impact on various cryptocurrency markets. Based on my analysis and the insights shared by renowned Bloomberg ETF analyst James Seyffart, I believe that Ethereum spot ETFs will face limitations in attracting investments compared to their Bitcoin counterparts.

As an analyst, I’ve been observing the market reaction following last week’s surprise approval of Ethereum Spot Exchange-Traded Funds (ETFs). The anticipation surrounding these new investment vehicles is palpable, with many investors eagerly waiting for their debut trading session. Notably, Bloomberg ETF expert James Seyffart has added his insights to the conversation, sharing his perspective on how much capital Ethereum spot ETFs may attract in comparison to their Bitcoin-based counterparts.

ETH Spot ETF Limited By Ethereum’s Utility And Other Factors – Analyst

During an interview with Bitwise Chief Investment Officer Matt Hougan on May 24th, Seyffart expressed his belief that the demand for Ether spot Exchange-Traded Funds (ETFs) would reach a peak of only 25% compared to that of Bitcoin spot ETFs.

Based on significant disparities in market values, Seyffart formulated his forecasts using Ethereum’s $449.25 billion market share, equivalent to approximately 30% of Bitcoin’s $1.35 trillion market capitalization (as per CoinMarket data).

The analyst additionally pointed out significant variations in the spread between these two ETFs and their underlying assets. Seyffart noted that the divergence between Ethereum’s ETF representation and its original form as a cryptocurrency is more pronounced than the difference between Bitcoin’s ETF and its own identity as a digital currency.

As a researcher studying Exchange-Traded Funds (ETFs), I’ve come across an intriguing observation regarding Ethereum spot ETFs. These funds may restrict investors from accessing native Ethereum features, such as staking – a significant source of passive income – and various on-chain applications like Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs). Consequently, some investors might opt to invest directly in Ethereum instead, enabling them to fully utilize these features.

Considering all the relevant factors, Seyffart anticipates that the new investment funds for Ethereum will have successful launches, though not to the same extent as Bitcoin spot ETFs. He estimates that approximately 20-25% of investments will flow into these Ethereum ETFs once trading begins. However, Eric Balchunas from Bloomberg holds a more cautious view, predicting only 15-20% of investments for the Ethereum ETFs compared to their Bitcoin counterparts.

It’s clear that the success of Ethereum spot ETFs will significantly impact other crypto spot ETFs seeking approval from the US Securities and Exchange Commission. Among these potential newcomers is the XRP ETF, which has garnered a lot of attention from cryptocurrency enthusiasts. However, its debut is far from certain as regulatory clarity regarding institutional sales of XRP remains elusive.

Ethereum Price Overview

In other news, Ethereum is trading at $3,766 with a 0.51% gain in the last day. This slight positive performance underscores Ethereum’s form all week with a combined 20.47% gain recorded in the last seven days. Meanwhile, ETH’s daily trading volume is down by 51.27% and is valued at $10.03 billion.

Analyst Predicts Ethereum Spot ETFs To Attract 25% Of BTC Demand – Here’s Why

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2024-05-26 10:52