Potential ETH ETFs Could Draw 25% of BTC ETF Demand
Mitchell Nixon
Bloomberg Analysts Predict Spot Ethereum ETFs Could Capture Up to 25%
Bloomberg ETF analyst James Seyffart suggests that spot Ethereum ETFs might capture 20% to 25% of the demand seen by spot Bitcoin ETFs.
In an interview with Bitwise, Seyffart mentioned that his colleague, Bloomberg ETF analyst Eric Balchunas, predicts the new funds will attract 15% to 20% of the demand.
Seyffart compared these projections to the fact that ETH holds roughly 30% of Bitcoin’s $1.4 trillion market cap, considering his estimate a “discount” relative to that figure.
He pointed out that the discrepancy is due to certain product limitations. For instance, ETH ETF issuers will not participate in staking, meaning ETF investors will miss out on earning yield, unlike ETH holders. Additionally, Ethereum’s on-chain utility is greater than Bitcoin’s, a benefit that ETF investors will not be able to access.
Seyffart stated:
The Wider Gap Between Ether ETFs and Ether Compared to Bitcoin ETFs
” … The gap between Ether as an ETF and Ether itself … is a little wider than the gap between Bitcoin and Bitcoin as an ETF wrapper.”
He noted that Ethereum futures ETFs, holding just 12% of the assets compared to futures ETFs in the US, do not offer a “good sample” for estimation. In foreign markets, ETH futures ETFs hold 20% to 30% of the assets relative to Bitcoin futures ETFs.
In conclusion, Seyffart anticipated significant launches for spot ETH ETFs, though not as substantial as those for spot Bitcoin ETFs. “There’s going to be demand,” he affirmed.
In contrary, Bitwise CIO Matt Hougan forecasted “significant demand” for spot Ethereum ETFs.
Hougan identified two main sources of this demand. Firstly, he suggested that many investors consider diversification a “fundamental starting point.”
He anticipated that “many investors,” though “not a majority,” would initially adopt a diversification strategy. Hougan also predicted that interest would grow over time, with a majority of professional investors seeking diversified exposure within five years.
Hougan stated:
“[Investors] don’t want to own just one stock. They don’t want to own just one bond. So why would they want to own just one crypto asset?”
Secondly, Hougan highlighted that Ethereum’s position as a “high growth tech investment” would attract investors, mentioning “killer apps” such as stablecoins, non-fungible tokens, DeFi, gaming, and social apps.
It will be very interesting to see how the demand for the Ether ETF develops, particularly in comparison to Bitcoin’s.
Conclusion
In conclusion, the potential demand for spot Ethereum ETFs, while expected to be significant, might not reach the same levels as Bitcoin ETFs. Analysts like James Seyffart and Matt Hougan highlight the unique factors and growth opportunities that Ethereum presents, such as its diverse applications and high-growth potential. This scenario parallels the broader crypto mining landscape, where understanding key metrics like hashrate and utilizing tools such as a bitcoin profitability calculator are crucial for making informed investment decisions.
For those venturing into crypto mining, whether as a bitcoin miner or using ASIC miners, it’s essential to grasp the dynamics that influence profitability and market demand. Just as the demand for Ethereum ETFs grows, so does the need for accurate tools and guidance in the crypto mining sector.
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