According to a research paper released by JPMorgan on Thursday, there would be significantly less demand for spot ether (ETH) exchange-traded funds (ETFs) than for their bitcoin (BTC) equivalents for a variety of reasons. According to JPMorgan, net inflows into spot ether exchange-traded funds might reach $3 billion throughout the remainder of the current fiscal year. The amount might increase to $6 billion if staking is allowed, the report stated.
“Bitcoin had the first mover advantage, potentially saturating the overall demand for crypto assets in response to spot ETF approvals,” analysts led by Nikolaos Panigirtzoglou wrote.
Following the Securities and Exchange Commission’s (SEC) approval of applicant firms’ crucial regulatory files last week, ether ETFs are almost ready to be made available in the United States. Because the regulator must also approve their S-1 files before they may trade, they are not yet cleared to do so. The first Bitcoin ETFs traded in January.
According to the research, the April bitcoin reward halving increased demand for spot bitcoin ETFs, but ether will not see a comparable boost in the near future.According to the bank, these products are less appealing than those on other platforms that provide staking yields because approved spot ether ETFs do not allow staking.
Ether as an application token, “differs from bitcoin in its value proposition for investors with bitcoin having a broader appeal by competing with gold in portfolio allocations,” the authors wrote.
The bank pointed out that institutional investors would find ether’s spot ETFs less enticing than those of its larger rival because to lesser liquidity and fewer assets under management (AUM). As speculative investors who purchased the Grayscale Ethereum Trust (ETHE) in anticipation of its conversion to an ETF are likely to profit, the market’s immediate response to the introduction of spot ether ETFs is anticipated to be negative. The analysis stated that $1 billion in withdrawals from ETHE might push ether prices lower.