Why one analyst thinks Ethereum ETFs will be ‘disappointing’

Why one analyst thinks Ethereum ETFs will be ‘disappointing’
There are signs institutions are less interested in Ethereum ETFs than they are Bitcoin ETFs. Credit: Darren Joseph
  • Institutions gobbled up Bitcoin after the approval of spot Bitcoin ETFs.
  • They might not show the same interest in Ethereum, according to researcher Noelle Acheson.

Bitcoin hit new highs just weeks after the US Securities and Exchange Commission approved spot Bitcoin exchange-traded funds.

The move let institutions gobble up more than $12 billion worth of the original cryptocurrency, according to data from pseudonymous analyst Hildobby.

Ethereum investors might not be so lucky.

Several indicators suggest institutional interest in Ethereum is much lower than it was for Bitcoin, according to researcher Noelle Acheson, former head of market insights for Genesis Global Trading.

She isn’t the only pessimist.

Bloomberg Intelligence ETF analyst Eric Balchunas expects Ethereum ETFs to be “10-15% of the assets of the BTC ETFs.”

The SEC had long fought against the approval of spot crypto ETFs, arguing they were vulnerable to manipulation.

After losing a lawsuit filed by crypto asset manager Grayscale Investments, the SEC capitulated in January with the approval of 11 spot Bitcoin ETFs.

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Still, it had signalled it would deny applications for spot Ethereum ETFs.

That changed this week, amid a flurry of pro-crypto developments in the US.

On Monday, Balchunas and his colleague James Seyffart updated their odds of spot Ethereum ETF approval to 75% from 25%.

That approval came Thursday, but the actual launch may be weeks or months away. And whether it drives Ethereum to its own all-time high is another matter.

“When/if the ETH spot ETFs eventually launch, we should brace ourselves for a disappointing reception,” Acheson wrote in her newsletter, Crypto is Macro.

That’s in part because institutional investors have shown little interest in existing Ethereum-based products.

In Hong Kong, which approved spot Bitcoin and Ethereum ETFs last month, Ethereum accounts for less than 15% of the assets under management, Acheson notes.

In the US, meanwhile, investors already have access to Ethereum futures ETFs. And they aren’t that interested.

“The [assets under management] of the leading ETH futures ETF (EETH) is around 4% that of the leading BTC futures ETF (BITO),” Acheson writes.

As for the spot Ethereum ETF itself, available data suggests institutional interest might be lacking there as well.

“The CME is the largest BTC derivatives platform in the market, in terms of open interest,” Acheson writes.

“But it ranks only fifth in ETH derivatives. US institutional investors are maybe just not really into the ETH narrative?”

To be sure, open interest in Bitcoin was highest on Binance, with CME taking the top spot just before the approval of spot Bitcoin ETFs in January.

There’s evidence that’s already happening with Ethereum: CME was in the sixth spot at the beginning of the week.

And Wall Street executives have repeatedly said they see potential in Ethereum.

“Remove the regulatory uncertainty around proof of stake and watch how Wall Street runs to ETH,” investor Jim Bianco wrote on X, referring to the method Ethereum uses to confirm transactions and create new coins.

“It is an entire ecosystem with borrowing, lending, insurance, tokenomics, staking (yield), stablecoins, NFTS, primitives, L2s, and on and on. Plenty for them to work with here as opposed to hodl-ing one coin,” he said.

Crypto market movers

  • Bitcoin is down 3.2% at $67,297 over the past 24 hours.
  • Ethereum is down 3.4% at $3,679.

What we’re reading

Aleks Gilbert is a DeFi correspondent based in New York. Have a tip? You can contact him at aleks@dlnews.com.