TL;DR
- Ethereum (ETH) ETFs could capture only 20% of the Bitcoin (BTC) ETF market.
- The analysis is based on the performance of futures ETFs and the comparison between the gold and silver markets.
- ETH ETFs are expected to launch in July, with optimistic projections for the ETH price.
The long-awaited introduction of Ethereum (ETH) ETFs in the United States has raised high expectations among investors, although predictions suggest that they will fail to match the success of Bitcoin (BTC) ETFs.
According to Bloomberg ETF analyst Eric Balchunas, ETH ETFs could capture around 20% of the market share currently dominated by BTC ETFs.
10 may be a bit much.. but I'd at least divide by 5 when it comes to expectations around the Ether spot ETFs re flows/volume/media/everything relative to spot bitcoin ETFs. That said, grabbing 20% of what they got would be huge win/successful launch by normal ETF standards. https://t.co/QDenr3jY2B
— Eric Balchunas (@EricBalchunas) May 29, 2024
This estimate is based on trends seen in the futures market, where ETH futures only make up about 20% of the market compared to BTC futures.
Balchunas draws an analogy between cryptocurrency ETFs and precious metals ETFs, comparing BTC to gold and ETH to silver.
Historically, silver ETFs have captured only about 15% of the market share of gold ETFs.
This comparison suggests that many investors might prefer to focus on Bitcoin, just as they prioritize gold over silver for their precious metals investment allocations.
Despite these more moderate expectations, achieving a 20% share of the BTC ETF market would be considered a successful launch by normal ETF standards.
As of the end of May, BTC ETFs in the United States had accumulated total flows of $13.7 billion, which could translate to approximately $2.7 billion for ETH ETFs if Balchunas’ projections come true.
Market dynamics vary in different regions. For example, in Hong Kong, Bosera’s top ETF funds show that BTC ETF flows doubled those of ETH, suggesting regional differences in investor behavior and preferences.
Furthermore, ETH’s market cap, which is 34% of BTC’s, indicates considerable, albeit lower, investor interest compared to BTC.
Expectations for Ethereum ETFs
Despite lower expectations compared to BTC, the launch of ETH ETFs represents a significant development in the cryptocurrency market, offering investors more options to gain exposure to ETH.
Analysts expect the introduction of ETH ETFs in the United States, which could occur in July, to have a positive impact on the price of ETH, with projections that it could reach $4,500 before they begin trading.
Importantly, Balchunas’ forecasts are based on historical data and current market trends.
The adoption and performance of ETH ETFs will largely depend on market sentiment and evolving investor demand.
As investors look to diversify their cryptocurrency portfolios, ETH ETFs could become a valuable tool to facilitate access to this digital asset.
Although ETH ETFs may not reach the same levels of success as BTC, their launch is still an important milestone for the cryptocurrency market.
They will provide a new avenue for investors to access ETH, which could drive the growth and adoption of this cryptocurrency in the future.
