According to CoinDesk, JPMorgan said in a research report on Thursday (30th) that demand for Ethereum spot ETFs will be much lower than similar Bitcoin fund products for a variety of reasons.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote:
“Bitcoin has a first-mover advantage that could saturate the overall demand for crypto assets generated by spot ETF approval.”
The U.S. Securities and Exchange Commission (SEC) last week approved a 19b-4 proposal related to an Ethereum spot ETF, but investors must still wait for approval of the S-1 registration statement filed by the fund issuer before they can begin trading such fund products. The SEC has asked issuers of ether spot ETFs to submit their draft S-1 documents by Friday, The Block reported on Thursday, citing two people familiar with the matter. Bloomberg analysts expect a listing by the end of June to be a reasonable possibility.
Not incorporating a staking mechanism will reduce the attractiveness of Ethereum spot ETFs
JPMorgan also expects Ethereum spot ETFs to attract as much as $3 billion in net inflows over the rest of the year, but the investment bank said the figure could rise to $6 billion if staking is allowed on such products.
The report notes that April’s Bitcoin halving this year was an additional demand catalyst for Bitcoin spot ETFs, while Ethereum will not see a similar push in the future. The investment bank said the lack of a staking mechanism for approved Ethereum spot ETFs would also make such products less attractive compared to other platforms that offer staking yields.
Ethereum, as an application token, "has a different value proposition to investors than Bitcoin, which has broader appeal by competing with gold in portfolio allocations," the authors wrote.
JPMorgan also noted that lower liquidity and lower assets under management (AUM) would make the Ethereum spot ETF less attractive to institutional investors than its larger rivals.
Grayscale Ethereum Trust may see $1 billion outflow
The initial market reaction to the launch of an Ethereum spot ETF is likely to be negative, as speculative investors who bought Grayscale Ethereum Trust (ETHE) in anticipation of its conversion to an ETF may take profits. The report claims that ETHE could see $1 billion in outflows, putting downward pressure on the price of ether.
According to previous reports by Zombit, cryptocurrency data provider Kaiko said that Grayscale’s ETHE may experience an average daily outflow of $110 million if it follows a similar pattern to its Bitcoin Trust Fund (GBTC) in the first month after the switch.
Related reports: “Market Experts: Ethereum spot ETF issuers’ cancellation of staking plans may reduce the attractiveness of such funds”
This article JPMorgan Chase: Market demand for Ethereum spot ETF may be much lower than Bitcoin ETF appeared first on Zombit.
