Ethereum ETF Warning from Analysts: ‘Expected Demand from Institutions May Not Come!’ Here are the Details

US Securities and Exchange Commission (SEC) spot Bitcoin Just weeks after approving exchange-traded funds (ETFs), Bitcoin soared to new highs and institutions poured over $12 billion into the cryptocurrency. However Ethereum investors may not see the same enthusiasm for their own ETFs.

Analyst Predicts Ethereum ETFs Will Fail Despite SEC Approval

Noelle Acheson, former head of market insights at Genesis Global Trading, suggests that several indicators point to a significant decline in institutional interest in Ethereum compared to Bitcoin.

Bloomberg Intelligence ETF analyst Eric Balchunas echoes this sentiment, predicting that Ethereum ETFs will only collect 10-15% of the assets attracted by Bitcoin ETFs.

The SEC has previously resisted approving spot crypto ETFs, citing manipulation concerns.

However, after losing a lawsuit against crypto asset manager Grayscale Investments, the agency approved 11 spot Bitcoin ETFs in January.

There was a significant shift this week when the SEC approved spot Ethereum ETFs amid a wave of pro-crypto developments in the US.

Despite the approval, Acheson warns that the launch of Ethereum ETFs may not lead to the same volatility as Bitcoin’s.

Institutional investors have shown little interest in existing Ethereum-based products. In Hong Kong, Ethereum accounts for less than 15% of assets under management for the newly approved spot Bitcoin and Ethereum ETFs.

In the US, Ethereum futures ETFs also lag behind their Bitcoin counterparts, with the leading ETH futures ETF managing only 4% of the assets of the leading BTC futures ETF.

Acheson notes that institutional interest in Ethereum derivatives is similarly low.

CME Group, a major derivatives exchange, ranks fifth in its ETH derivatives short position, far behind its position in Bitcoin derivatives. This suggests that US institutional investors may not be that interested in Ethereum.

However, some industry insiders remain optimistic about Ethereum’s potential.

Investor Jim Bianco says regulatory clarity on Ethereum’s proof-of-stake mechanism will be significantly ahead of Wall Street, given Ethereum’s comprehensive ecosystem that includes borrowing, lending, insurance, tokenomics, staking, stablecoin, NFT and more. He believes it might attract attention.

*This is not investment advice.