Analyst Eric Balchunas from Bloomberg has expressed skepticism about the potential impact of an Ethereum spot ETF launch. While Bitcoin spot ETFs have seen massive success, Balchunas believes that an Ethereum spot ETF would pale in comparison. He described the launch as “small potatoes” compared to the Bitcoin ETFs, citing both anecdotal and public data to support his prediction.
Before Bitcoin spot ETFs could be launched, asset managers had to overcome hurdles with the Securities and Exchange Commission (SEC). There were significant legal battles due to concerns about market manipulation in the Bitcoin industry. Despite these challenges, Bitcoin spot ETFs managed to secure approval and have attracted substantial net flows since their introduction.
Potential Market Response to Ethereum Spot ETF
Although there is a strong belief that the SEC will eventually approve an Ethereum spot ETF, the response from the market remains uncertain. Previous Ethereum futures ETFs did not garner significant flows or volume compared to Bitcoin futures ETFs. Additionally, the AUM of the Purpose Ether ETF in Canada is significantly lower than that of the Bitcoin ETF from the same company, reflecting potential differences in popularity between Ethereum and Bitcoin among investors.
According to a Bitwise survey of registered investment advisors, a majority (71%) expressed a preference for Bitcoin over Ethereum. This preference may impact the demand for an Ethereum spot ETF, as investors may be more inclined to allocate their resources towards Bitcoin-based products.
While there is anticipation surrounding the potential launch of an Ethereum spot ETF, it may face challenges in replicating the success of Bitcoin spot ETFs. The differences in market dynamics and investor preferences between Ethereum and Bitcoin could influence the reception of an Ethereum spot ETF. Ultimately, the launch of an Ethereum spot ETF may not elicit the same level of enthusiasm and investment as seen with Bitcoin spot ETFs.