Ether Spot ETFs Expected to See Lower Demand Compared to Bitcoin Versions, Says JPMorgan

Demand for ether spot ETFs is likely to be significantly lower than that for bitcoin ETFs, JPMorgan stated. The bank highlighted that bitcoin has the first-mover advantage, which may have already saturated the market’s demand for crypto assets following spot ETF approvals. JPMorgan anticipates ether funds could see inflows of up to $3 billion this year, potentially rising to $6 billion if staking is allowed.

The demand for spot ether (ETH) exchange-traded funds (ETFs) is expected to be considerably lower than that for bitcoin (BTC) ETFs for various reasons, JPMorgan said in a research report on Thursday. Analysts, led by Nikolaos Panigirtzoglou, noted that bitcoin’s first-mover advantage likely captured a significant portion of market demand for crypto assets following spot ETF approvals.

JPMorgan predicts that spot ether ETFs could attract up to $3 billion in net inflows for the remainder of this year, with the potential to reach $6 billion if staking is permitted. The approval of key regulatory filings by the Securities and Exchange Commission (SEC) last week brings ether ETFs closer to availability in the U.S. However, these funds cannot begin trading until the SEC also approves their S-1 filings. Bitcoin ETFs, in contrast, have been trading since January.

The report highlighted that bitcoin’s reward halving in April served as an additional demand catalyst for spot bitcoin ETFs. Ether lacks a similar upcoming event to boost demand. Additionally, the absence of staking options for approved spot ether ETFs makes them less attractive compared to other platforms that offer staking yields.

Ether’s role as an application token differentiates it from bitcoin, which has a broader appeal by competing with gold in portfolio allocations, the analysts explained. They also noted that ether’s spot ETFs might be less appealing to institutional investors due to lower liquidity and assets under management (AUM) compared to bitcoin ETFs.

JPMorgan anticipates a negative initial market reaction to the launch of spot ether ETFs. Speculative investors who bought the Grayscale Ethereum Trust (ETHE) expecting it to convert to an ETF may take profits, potentially leading to $1 billion in outflows and exerting downward pressure on ether prices, the report concluded.