The recent approval of an Ethereum spot ETF has caused a stir in the crypto world, but not everyone is convinced it's a game-changer. Bloomberg Intelligence's Eric Balchunas predicts that an Ethereum ETF will only capture a fraction of the assets that a Bitcoin ETF has captured, around 10-15%.
Will Ethereum disappoint investors or is there more to come? Let's find out!
Institutional Interest: Ethereum vs. Bitcoin
Comparing Ethereum’s institutional appeal to Bitcoin reveals some stark differences: Researcher Noel Acheson highlights that the largest Ethereum Futures ETF (EETH) only controls 4% of the assets in the Bitcoin Futures ETF (BITO), indicating that Ethereum does not enjoy the same level of support from institutional investors.
The approval of the Spot Bitcoin ETF in January saw a massive influx of institutional investors, sending the Bitcoin price to new highs. According to analyst Hildby, institutions bought $12 billion worth of Bitcoin after the ETF was approved. Ethereum investors may not see the same surge in interest.
Acheson noted that Ethereum's regulatory status remains unclear: While Ethereum is mentioned as a commodity in the lawsuit, the SEC has not clearly defined it, further complicating investing in the asset.
Managing expectations: What to expect
Balchunas and his colleague James Seifert previously raised the odds of a spot Ethereum ETF being approved to 75% due to the pro-crypto movement in the U.S. However, Balchunas expects the Ethereum ETF launch to be a disappointment compared to Bitcoin.
“If and when an ETH spot ETF finally launches, we should prepare for a disappointing reaction.” “Crypto is macro,” Acheson wrote in the newsletter, which he attributes to the traditionally low institutional interest in Ethereum-based products in the U.S. and abroad.
Researching global trends
A similar trend is seen in Hong Kong, where Ethereum represents less than 15% of spot ETF assets under management and institutional interest has been significantly muted. There appears to be a similar lack of enthusiasm in the US market, where investors already have access to an Ethereum futures ETF.
” [assets under management] The leading ETH futures ETF (EETH) is yielding roughly 4% of the leading BTC futures ETF (BITO).”
Acheson
Future outlook
There is some optimism within the industry about Ethereum's future, with investor Jim Bianco suggesting that removing regulatory uncertainty around Ethereum's proof-of-stake could bring in significant institutional investment.
The approval of an Ethereum ETF is a milestone, but its impact on institutional investors is still unclear, and Balchunas and others have warned not to expect a Bitcoin-like surge. Ethereum and other altcoins have been in a state of uncertainty while the market grapples with these changes.
Also see: Ethereum ETF Approval, What it Means for Bitcoin and Altcoins
