This Analyst Thinks the Ethereum ETFs Will Be "Disappointing"—Here's Why

Analysts doubt Ethereum ETFs will mirror Bitcoin's ETF success due to lower hype and existing products, but Ethereum's DeFi strength suggests long-term growth regardless.
ETH, Ethereum, Voice of Crypto

Key Insights

  • Some analysts believe Ethereum ETFs won't be able to replicate Bitcoin's success with the ETFs, due to lower institutional interest.

  • Compared to Bitcoin ETFs, Ethereum ETFs might face less hype due to being a "second act."

  • Analyst, Noelle Acheson pointed out how existing Ethereum-based products like futures ETFs haven't been able to pull in significant investment.

  • Overall, regardless of ETF performance, Ethereum's DeFi dominance positions it for future growth.

  • The full impact of Ethereum ETFs on the market should come fully into view in the coming months, as the industry adopts a "wait and see" approach.

This week, the world is seeing something similar to what we did in January this year, with the approval of 11 spot Bitcoin ETF applications by the US Securities and Exchange Commission.

Only this time, we are seeing the same with Ethereum ETFs.

During the first week of the Bitcoin ETFs hitting the markets for trading $13.9B worth of assets was traded across the newly approved ETFs, with the iShares and Fidelity raking in $1.2 billion and $1 billion respectively.

<div class="paragraphs"><p>Bitcoin’s post-ETF rally</p></div>

Bitcoin’s post-ETF rally

Before long, Bitcoin spent the next two months rallying all the way from $38,600 to $73,800 in a near 100%  move to the upside, as illustrated above.

As expected, analysts and investors are anticipating something similar for Ethereum with the approval of these new ETFs—well—not all analysts though, it would seem.

According to Analyst Noelle Acheson in a recent newsletter, the new Ethereum ETFs might turn out to be “disappointing” compared to Bitcoin’s.

Sister Hazel Versus Nirvana

Several analysts don’t seem to think an Ethereum ETF is worth all the hype.

Two of them in particular, including Researcher Noelle Acheson and senior Bloomberg ETF analyst Eric Balchunas have taken to the internet to express skepticism about the possible performance of these new exchange-traded products.

For example, Balchunas tweeted that he expects the Ethereum ETFs to only capture “10-15% of the assets of the BTC ETFs.”, which is a fairly disappointing figure if things hold.

<div class="paragraphs"><p>Sister Hazel versus Nirvana</p></div>

Sister Hazel versus Nirvana

Balchunas made a reference to a concert where rock band, Sister Hazel comes on stage right after Nirvana and expects the crowd to scream just as loudly.

By this, Balchunas means that the Bitcoin ETFs were a far more hyped and anticipated product compared to the Ether ETFs, and there might not be as much hype or interest in them as there was for Bitcoin.

Disappointing ETFs?

Noelle Acheson, former head of market insights for Genesis Global Trading, on the other hand, wrote something interesting in her newsletter, Crypto is Macro.

In the newsletter, Acheson warned investors of a possibly “disappointing reception” for the Ethereum ETFs.

The researcher pointed out the glaring lack of interest in other Ethereum-based products like futures ETFs, like how Ethereum currently holds a meagre 15% of assets under management in Hong Kong's recently approved spot Bitcoin and Ethereum ETFs.

“The previous day the CME ranked sixth, though, so US institutional interest in ETH is jumping.

But the relatively low participation from the same institutions that will probably be expected to pour into the ETH spot ETF upon launch, suggests that the initial inflows could be disappointing.

Another way to gauge potential demand is via other ETFs. In Hong Kong, ETH accounts for less than 15% of total spot crypto ETF AUM.”

<div class="paragraphs"><p>Bitcoin versus Ethereum ETFs in Hong Kong</p></div>

Bitcoin versus Ethereum ETFs in Hong Kong

Moreover, aside from Hong Kong, these Ethereum Futures ETFs are available and are still failing to attract significant attention all the same, with an even more disappointing 4% of the assets under management compared to the Bitcoin futures ETF.

To drive the point further home, Acheson, noted that the CME (the largest BTC derivatives platform) is ranked fifth in ETH derivatives, further showing the nonexistent institutional interest in Ethereum.

Overall: We Need a Wait-and-See Approach

As it stands, it is still too early to say what effects these newly approved ETFs will have on Ethereum and the crypto market at large.

While Wall Street is starting to show some degree of interest in the ETF market, the level of enthusiasm and interest in the new Ethereum ETPs can vary strongly, depending on the institutions involved, the position of the market, and regulatory updates from the SEC.

In all, Ethereum’s strong standing in the Defi landscape, which offers lending, staking, borrowing and trading protocols are set to position the network as an industry leader sooner or later, regardless of how the ETF business goes.

Finally, the coming weeks and months will be one of the most crucial times to determine where Ethereum goes, and how fast it does so.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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