- Within the first five months, Ethereum ETFs could receive 20% of inflows as bitcoin ETFs, according to a report by Galaxy Vice President of Research Charles Yu.
- Because Ethereum and Bitcoin differ structurally in a few key ways, these funds might have a bigger market impact on the price of Ethereum.
- The asset class will gain legitimacy through the efforts of independent financial advisors and broker-dealer platforms, which are expected to boost demand.
Exchange-traded funds that track Ethereum’s native token, according to Galaxy Digital, have the potential to grow into a multi-billion dollar industry shortly after being approved.
According to a report released on Wednesday by Charles Yu, Vice President of Research at Galaxy, in the first five months of trading, ETH ETFs may receive as much as 50% of inflows as bitcoin ETFs, which have become surprisingly popular since a suite of products was introduced in January.
Between launch and June 15, Yu reported that net inflows into Bitcoin ETFs totaled $15.1 billion. Similar ether-based funds might attract inflows of $3 billion to $7.5 billion if his prediction comes true. This is about in line with the projection made by Bitwise Chief Investment Officer Matt Hougan that net inflows into U.S. spot ETH ETFs may total $15 billion during the first 18 months of the fund’s existence.
According to Yu’s analysis, the Bitcoin ETFs have been available for a little less than six months and can be a helpful starting point for analyzing how Ethereum spot-ETFs are expected to be received. Specifically, he claimed that bitcoin ETFs are at least somewhat to blame for this year’s price increase in bitcoin.
Yu stated that we believe the possible introduction of spot ether exchange-traded funds (ETFs) will primarily benefit Ethereum’s market uptake as well as the wider cryptocurrency industry. ETFs will also assist establish ETH’s legitimacy in the eyes of regulators, legislators, and institutional investors. According to him, broker-dealer platforms and independent investment advisors will probably be the main sources of demand.
Not every rose
Nine issuers, including reputable companies like BlackRock, Fidelity, and VanEck, are competing to introduce ten spot market ETH ETFs in the United States. All three companies have also introduced spot bitcoin exchange-traded funds (ETFs), with the majority of bitcoin inflows into the funds coming from BlackRock’s IBIT trust.
The Digital Currency Group subsidiary Grayscale also wants to turn its closed-end Ethereum trust into an exchange-traded fund (ETF), much like how it did with the massive Grayscale Bitcoin Trust back in January. At least $17.5 billion has been taken out of GBTC’s rather expensive fund, which many market observers—including Yu—account for contributing to the decline in the price of bitcoin.
Yu also believes that 319,000 ETH, or $1.1 billion, might leave the Grayscale Ethereum Trust each month, creating a buffer against net inflows into ETFs.
According to Yu, the SEC has imposed conditions on the suggested funds that would discourage investor interest, such as prohibiting businesses from staking the underlying ether in order to generate yield.
That being said, because of a few structural distinctions between Ethereum and Bitcoin, the eventual introduction of ETFs might have a bigger market influence on the price of ETH. This covers the quantity of ETH held in staking plans, decreased exchange supply, and decreased net emissions.
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.
