- JPMorgan Report Predicts Lower Demand for Ethereum Spot ETFs Compared to Bitcoin, with Initial $3 Billion Investment Likely.
- Ethereum ETFs Might Reach $6 Billion if Staking Is Included, Despite Current Regulatory Challenges in the U.S.
JPMorgan has released a report suggesting that the Ethereum Spot Exchange-Traded Funds (ETFs) in the United States may attract less investment than Bitcoin-based ETFs. The report indicates that the market may have limited capacity to absorb new entries following the successful launch of Bitcoin Spot ETFs in January 2024.
According to JPMorgan, the Ethereum ETFs are projected to see an initial investment influx of approximately $3 billion. This figure could potentially double to $6 billion if the ETFs include options for asset managers to engage in staking, a process that allows participants to earn rewards on their holdings. However, the inclusion of staking remains uncertain due to regulatory challenges.
“Bitcoin had a first-mover advantage, potentially saturating overall demand for crypto assets in response to spot ETF approvals.
However, Ethereum does not have the advantage that Bitcoin has. At this point, the lack of staking feature in spot ETH ETFs makes these ETFs less attractive compared to other platforms that offer staking returns.” – Analysts led by Nikolaos Panigirtzoglou
In response to regulatory scrutiny, investment firms such as ARK Invest and 21 Shares have removed staking options from their ETF proposals, aiming to simplify the approval process by the U.S. Securities and Exchange Commission (SEC). This strategic move is intended to eliminate potential hurdles that could lead to rejection of their applications.
On May 23, 2024, the SEC approved the initial requests for Ethereum ETFs, marking a step toward potential market entry. Following this, major financial institutions, including Blackrock, updated their application forms to maximize their chances of obtaining regulatory approval.
Let's see whether the collective wisdom of CT can beat JP Morgan's prediction
US ETH Spot ETF net inflow within 3 months of launching (taking into account Grayscale ETHE outflow)?https://t.co/71ej3H8N9i
— Arthur (@Arthur_0x) May 30, 2024
This phase is important for the acceptance of Ethereum ETFs and could significantly influence the broader adoption of cryptocurrency investment products. The outcomes of these applications will provide insights into institutional and retail interest in diversifying into other cryptocurrencies beyond Bitcoin, potentially impacting the cryptocurrency investment market.
