Spot ether ETFs are not expected to have the same success as bitcoin ETFs. According to JP Morgan, the capital committed should reach a maximum of $3 billion. A figure far from bitcoin ETFs.

A mixed success. While the American financial markets regulator (the SEC) approved Thursday, May 23, the creation of index funds (ETFs) based on the cryptocurrency ether, the bank JP Morgan estimates that, for the rest of the year, the capital committed should reach 1 or 3 billion dollars. A figure well below the $20 billion in capital committed to the bitcoin ETF at Blackrock for example.

According to JP Morgan, bitcoin ETFs benefited from two factors. First: status. Bitcoin is the first cryptocurrency to arrive on the ETF market. And second: its capitalization. This reaches almost 1.230 billion dollars, it is almost three times more than ether, with a capitalization of 417 billion dollars.

Another explanation for the more timid success of the ether spot ETFs can also come from the fact that the bitcoin ETFs were launched just before the halving (this event, which occurs every 210,000 blocks validated on the Bitcoin blockchain and which consists of a reduction by two of the number of bitcoins issued on the market to reward miners). This event accelerated the popularity of bitcoin and its ETFs and therefore increased the value of bitcoin ETFs thanks to the scarcity effect.

Finally, spot ether ETFs do not include the “staking” parameter in determining the value. Holders of these spot ether ETFs do not have the possibility of generating passive yield by simply holding ether. This is therefore less interesting for investors than buying them directly. Even if this parameter were included in the future by a regulatory change, the bank JP Morgan estimates that it would only increase the trading flows of ether ETFs to a maximum of 6 billion dollars. Figures still far from bitcoin.

Antoine Larigaudrie, with Sébastien Bordry with Brightcove


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