Author: Helene Braun, CoinDesk; Translated by: Deng Tong, Golden Finance
Wintermute and Kaiko predict that initial demand for a spot Ethereum ETF may be lower than expected.
Wintermute expects inflows over the next year to be about 62% lower than the six-month inflows into the Bitcoin ETF.
Several prominent cryptocurrency firms have seen a relatively lackluster debut for exchange-traded funds holding Ethereum (ETH).
Wintermute, a major market maker, expects Ethereum ETFs to receive a maximum of $4 billion in inflows from investors over the next year. That’s lower than the $4.5 billion to $6.5 billion most analysts expected, and about 62% less than the $17 billion that Bitcoin ETFs have raised so far since they began trading in the U.S. six months ago.
However, Wintermute does believe that Ethereum’s price could rise 24% over the next 12 months, driven by these inflows.
The ETFs received final approval from regulators Monday evening, meaning issuers including BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Bitwise, 21Shares and Invesco can begin offering the funds, which could begin trading on Tuesday.
U.S. regulators rejected a request from issuers to allow Ethereum ETFs to collateralize their cryptocurrency holdings, which would have generated income that could be shared with investors. “This loss reduces the competitiveness of ETH ETFs compared to direct holdings, and investors can still benefit from staking,” Wintermute said in its report.
Research firm Kaiko holds a similar view based on previous Ethereum-focused offerings.
Will Cai, head of indexes at Kaiko, said in a report: "The futures-based ETH ETF launched in the U.S. late last year met with less than satisfactory demand. All eyes are on the ETF launch scene, with high hopes for rapid asset accumulation."
Regardless of the long-term trend, Ethereum’s price will likely be “sensitive” to inflows in the first few days of trading, he said.
Ethereum implied volatility surged over the weekend, with the contract closest to expiration (July 26) jumping from 59% to 67%, according to data tracked by Kaiko.
“This suggests that there is less confidence in ETH’s launch as traders are willing to pay a higher premium to hedge their bets,” the report said.
The issuer disclosed the expected management fee in a filing last week, clearing one of the final hurdles to final regulatory approval, with Grayscale’s Ethereum Trust seeking to charge investors 2.5%, while most other managers keep fees in the lower range of 0.15% to 0.25%.
