Why Ethereum ETFs May Not See the Same Success as Bitcoin ETFs

The recent green light for Ethereum spot ETFs has stirred up the crypto world, but not everyone’s convinced it’s a game-changer. Bloomberg Intelligence’s Eric Balchunas predicts Ethereum ETFs might only snag a fraction, about 10-15%, of the assets Bitcoin ETFs have bagged.

Will Ethereum disappoint investors, or is there more to the story? Dive in to find out!

Institutional Interest: Ethereum vs. Bitcoin

Contrasting Ethereum’s institutional appeal with Bitcoin’s reveals a stark difference. Researcher Noelle Acheson highlights that the largest Ethereum futures ETF (EETH) manages just 4% of the assets of its Bitcoin counterpart (BITO). This tells us that Ethereum isn’t getting the same love from institutional investors.

When spot Bitcoin ETFs were approved in January, a large inflow of institutional investments was observed, sending the price of Bitcoin to new highs. According to analyst Hildobby, institutions bought over $12 billion worth of Bitcoin after ETF approvals. Investors in Ethereum may not get the same boost in interest.

Acheson points out that Ethereum’s regulatory status remains unclear. While Ethereum has been mentioned in court suits as a commodity, the SEC hasn’t clearly defined it, making investment in the asset even more complicated.

Managing Expectations: What to Anticipate

Balchunas and his colleague James Seyffart had earlier boosted the chance of a spot Ethereum ETF approval to 75% due to pro-crypto developments in the U.S. Balchunas, however, expects the launch of Ethereum ETFs to be disappointing compared to Bitcoin.

“When/if the ETH spot ETFs eventually launch, we should brace ourselves for a disappointing reception,” Acheson wrote in her newsletter, “Crypto is Macro.” Acheson attributed that to the traditionally lower institutional interest in Ethereum-based products in the U.S. and overseas.

Examining Global Trends

In Hong Kong, Ethereum makes up less than 15% of the assets under management for spot ETFs; a similar trend whereby institutional interest has been largely subdued. The U.S. market, where investors already have access to Ethereum futures ETFs, shows a lack of enthusiasm as well.

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

Acheson

Looking Ahead

Some voices within the industry remain optimistic about Ethereum’s future. Investor Jim Bianco suggests removing the regulatory uncertainty around Ethereum’s proof-of-stake might bring significant institutional investment.