Ethereum ETF May Disappoint Investors – Here’s Why

While some predict strong inflows, others warn that demand may not reach the levels seen in the Bitcoin ETF.

Optimism for the Ethereum ETF

Matt Hougan predicts $15 billion in ETF inflows over the next 18 months based on Ethereum ‘s market cap versus Bitcoin and data from international ETF markets.

Hogan believes that by the end of 2025, Bitcoin ETFs will hold $100 billion. After taking into account international market data and the lack of a profitable “carry trade” strategy for Ethereum, he arrived at the $15 billion estimate.

“Carry trades” is a trading strategy involve borrowing funds at a lower interest rate to invest in an asset with a higher yield. For example, Bitcoin ETF investors can profit by buying spot Bitcoin and selling BTC futures contracts. However, due to differences in the ETH futures market structure, liquidity and lack of staking, such a strategy is unlikely for Ethereum.

Cautious predictions by JPMorgan and others

JPMorgan analysts have a more conservative outlook, expecting inflows of $1-$3 billion for ETH ETFs. They argue that Ethereum lacks the first-mover advantage as well as the halving event that boosted Bitcoin ETFs. Ethereum’s proof-of-stake (PoS) mechanism also plays a role in their cautious outlook.
However, the amount of ETH stacked has shown a positive trend since January 2024, coinciding with the launch of the Bitcoin ETF.

Earlier, Bernstein suggested that owning Ethereum directly may be more profitable without staking, as the fund’s expense ratio may be a burden to investors. That’s part of the reason why VanEck plans to cut its fees initially.

Competitive landscape and future prospects

Bloomberg Chief Analyst Eric Balchunas noted that the ETF for Etherium may only attract about 10% of the inflows that Bitcoin ETFs have achieved, highlighting a significant gap.

Christopher Perkins, president of VC firm CoinFund, mentioned to Fortune that the main challenge facing Ethereum is branding. The poor response to the multiple ETH futures launch in October 2023 could be repeated in the spot debut.

Conclusion

The anticipation surrounding the launch of the Ethereum ETF brings a mix of bullish forecasts and cautious views. While these ETFs may not reach Bitcoin’s levels of success, they could still surprise the market with their market performance.

Alexander Stefanov