Bloomberg Analyst Believes Ethereum ETF Launch Will Pale in Comparison to Bitcoin
Bloomberg ETF analyst Eric Balchunas predicts that the launch of an Ethereum spot ETF will not have the same impact as the multiple Bitcoin spot ETFs that were recently launched in the United States. Balchunas describes the potential Ethereum ETF launch as “small potatoes” compared to the success of the original Bitcoin ETFs.
An Underwhelming Launch for Ethereum ETFs
In a recent tweet, Balchunas expressed his belief that an Ethereum spot ETF launch would not be as significant as its Bitcoin counterparts. He compared it to a lesser-known band performing after a popular headliner, suggesting that Ethereum would struggle to gain the same level of attention and interest.
The Data Behind Balchunas’ Prediction
Balchunas based his prediction on both anecdotal evidence and public data. He pointed out that the net flows of Bitcoin-based ETFs have exceeded $7 billion since their launch in January 2022, while there is no indication that Ethereum-based ETFs would generate similar levels of interest.
Legal Battles for Bitcoin Spot ETFs
Before Bitcoin spot ETFs were approved for public securities exchanges, asset managers faced significant legal challenges from the Securities and Exchange Commission (SEC). The SEC had concerns about market manipulation in the Bitcoin market, which led to prolonged debates and disagreements.
However, Grayscale successfully won a court battle against the SEC last year, paving the way for Bitcoin spot ETFs. This victory encouraged other major asset managers like BlackRock and Fidelity to apply for their own Ethereum spot ETFs.
Ethereum vs. Bitcoin: A Comparison of ETF Potential
While many expect the SEC to approve an Ethereum spot ETF, there are doubts about its market demand. For example, when Ethereum futures ETFs were launched in October 2021, they generated significantly less flow and volume compared to Bitcoin’s first futures ETF in the same month.
In Canada, the Purpose Ether ETF currently has an Assets Under Management (AUM) of $458 million CAD, whereas the company’s Bitcoin ETF has an AUM of $2.5 billion CAD. This suggests that Ethereum may be relatively less popular within an ETF wrapper compared to Bitcoin.
A survey conducted by Bitwise among registered investment advisors revealed that 71% of them favored Bitcoin over Ethereum.
ETFs: More Impactful for Bitcoin
In a previous interview with CryptoPotato, Balchunas explained that ETFs would have a greater impact on Bitcoin than on Ethereum. He attributed this to institutional investors’ limited understanding of the differences between the two assets.
Hot Take: Don’t Expect an Ethereum ETF Craze
The launch of an Ethereum spot ETF is unlikely to create the same level of excitement and inflows as seen with Bitcoin spot ETFs. Despite the growing popularity of Ethereum, it still falls short in terms of market cap and investor preference compared to Bitcoin. While an Ethereum ETF may eventually gain traction, it is expected to be overshadowed by its Bitcoin counterparts.
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