Bloomberg ETF analyst James Seyffart believes that spot Ethereum ETFs could see 20% to 25% of the demand experienced by spot Bitcoin ETFs.
Seyffart expressed his stance in an interview hosted by Bitwise, adding that his fellow Bloomberg ETF analyst, Eric Balchunas, believes the new funds will see 15% to 20% of the demand.
Seyffart compared both estimates to the fact that ETH has approximately 30% of Bitcoin’s $1.4 trillion market cap, calling his estimate a “discount” in that regard.
He attributed the difference to certain limitations of each product. ETH ETF issuers will not engage in staking, meaning that, unlike ETH holders, ETF investors cannot earn yield. Furthermore, Ethereum has greater on-chain utility than Bitcoin, and ETF investors will not be able to access it.
Seyffart declared:
” … The gap between Ether as an ETF and Ether itself … is a little wider than the gap between Bitcoin and Bitcoin as an ETF wrapper.”
Seyffart said that Ethereum futures ETFs, which have just 12% of the assets compared to futures ETFs in the US, do not provide a “good sample” for an estimate. ETH futures ETFs in foreign markets have 20% to 30% of assets proportionate to Bitcoin futures ETFs.
Ultimately, Seyffart predicted spot ETH ETFs would have “big launches” but not as big as spot Bitcoin ETF launches. “There’s going to be demand,” he concluded.
Bitwise CIO expects significant demand
Bitwise CIO Matt Hougan predicted “significant demand” for spot Ethereum ETFs.
Hougan said that demand will likely come from two sources. First, he suggested that many investors treat diversification as a “fundamental starting point.”
He predicted that “many investors” but “not a majority” would initially pursue a diversification strategy. Hougan also suggested that engagement could increase over time, with a majority of professional investors wanting diversified exposure within five years.
Hougan said:
“[Investors] don’t want to own one stock. They don’t want to own one bond. Why would they own just one crypto asset?”
Secondly, Hougan said that Ethereum’s role as a “high growth tech investment” will appeal to investors, citing “killer apps” such as stablecoins, non-fungible tokens, DeFi, gaming, and social apps.
ETH ETFs gained initial approval
The US SEC approved several 19b-4 rule changes on May 23, which will allow exchanges to list and trade several pending spot ETH ETFs.
One proposal that gained approval was NYSE Arca’s filing on behalf of Bitwise’s proposed fund.
The SEC must still handle each firm’s S-1 registration statements.
A launch date is unclear. Seyffart believes launches will occur in weeks or longer. JP Morgan believes the products will launch before November.