- Following the launch of the ETF, ETH will begin to outperform bitcoin after nearly 2.5 years of underperformance, according to the research.
- Based on the scale of comparable ETH products worldwide and CME futures open interest in relation to bitcoin, U.S. spot ETFs might amass over 1 million ETH in five months, according to K33 Research.
- The analysis stated that the absence of staking will not have an adverse effect on the inflows into the ETFs.
According to a research by crypto analytics firm K33 Research, Ethereum-based exchange-traded funds (ETFs) that can directly store ether (ETH) are shortly to arrive in the United States and might draw $4 billion in inflows in the first five months.
The firm made its prediction by comparing the amount of open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), the preferred marketplace for institutional investors, and the assets under management in currently available ETH-based exchange-traded products globally to comparable bitcoin (BTC) products.
Since ETH futures began trading on CME in 2021, Ether’s OI has averaged 35% of BTC futures, demonstrating considerable institutional demand for ETH in the U.S., according to K33. Currently, Ether’s OI on CME is 23% of the size of BTC futures.
K33 estimates that the ETH ETF inflows will range from $3 billion to $4.8 billion over the course of the first five months, based on the almost $14 billion in inflows that have already been made into the spot BTC ETFs. This estimate for this year is marginally higher than JPMorgan’s $3 billion projection.
As to the research, there could be a shortage of ETH for the asset since 800,000 to 1.26 million ETH, or around 0.7% to 1.05% of the entire token supply, have been gathered in the ETFs based on current pricing.
Spot ETF issuers will have to purchase tokens in the spot market at the same time that investors purchase ETF shares, in contrast to futures-based products.
Vetle Lunde, senior analyst at K33 Research, predicted that this massive supply absorption shock, similar to what happened with BTC, will cause the price of ETH to rise.
Following the launch of U.S. spot ETFs, Bitcoin saw a roughly 60% increase to all-time highs after first correcting in late January. K33 experts projected that, following over two and a half years of the ETH-BTC pair’s decline, the price of ETH would begin to outperform BTC with the introduction of ether ETFs.
Most market players were taken aback when the U.S. Securities and Exchange Commission (SEC) last month authorized significant submissions for spot Ethereum ETFs.
This action made it possible to approve the funds for trading within the United States. According to the K33 report, market watchers anticipate that the ETFs will begin trading as soon as late June or early July after completing the required paperwork.
Notably, in an attempt to placate the regulator, applicants removed the sections of their files that would have permitted staking the fund’s assets.
In contrast to JPMorgan’s position, K33 stated that the removal of staking will not have a detrimental effect on new investor inflows into the ETFs because funds with staking own 98% of European products and 99% of assets under management in Canadian ETH ETFs.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
