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Why Analysts Anticipate No Demand for Ethereum ETFs

2 Mins read

In the cryptocurrency market, the buzz around Bitcoin ETFs (exchange-traded funds) has been monumental. Yet, when it comes to Ethereum, the second-largest crypto by market capitalization, the excitement seems muted.

According to industry leaders, a combination of market dynamics, investor understanding, and the unique attributes of Ethereum itself may be the reason behind it.

Institutional Interest in Ethereum ETFs

Raoul Pal, CEO of Real Vision, highlighted a crucial difference between Bitcoin and Ethereum. “Ethereum offers a broader-based technology bet and yields that Bitcoin does not,” he stated. This distinction is vital for institutional investors, who are not just looking for price appreciation but also additional benefits.

Pal argued that if Ethereum ETFs do not offer staking yields, institutions may prefer to own Ethereum directly. This preference is because holding the asset allows them to stake it and earn yields, an option not typically available through ETFs.

For instance, at Coinbase, Ethereum stakers currently receive an annual yield of 3.46% when they hold ETH for a year. Presently, the staking ratio for Ethereum, which reflects the proportion of eligible tokens actively engaged in staking, is at 23.32%.

The idea of Ethereum ETFs, therefore, may become less attractive to institutional investors, who could see more benefit in direct ownership. Pal raised concerns about the possible dynamics, where asset managers could capitalize on the staking yields without passing these benefits to ETF holders. This scenario could lead to a lack of institutional interest in Ethereum ETFs.

A lot of the institutions would prefer to own ETH itself because then they can stake it and get yield. If you don’t give them yield, some asset manager who launches the ETF is going to get rich. [For example,] BlackRock will make all the money because they’ll get the ETH staking yield and they don’t give it to the to the ETF holders,” Pal said.

ETH Price Prediction: Correction Ahead

On the other hand, Peter Brandt, a seasoned trader, expressed a bearish view on Ethereum. His approach as a swing trader reflects a short-term, speculative interest in shorting it rather than a long-term investment.

According to Brandt, ETH trades inside a wedge, which could soon lead to a correction toward $1,000 or even as far as $650.

“My bias remains to be short ETH. I’m a swing trader in ETH, not a hodler. The chart lacks underlying strength IMO. If I go short below $2,100 and am wrong, that’s not a big deal to me,” Brandt said.

Ethereum Price Performance
Ethereum Price Performance. Source: TradingView

While Bitcoin and Ethereum are both leading cryptocurrencies, they appeal to investors for different reasons. Bitcoin is often viewed as a “digital gold,” a store of value, while Ethereum is seen as a platform for building decentralized applications and smart contracts.

This fundamental difference influences how ETFs for each cryptocurrency might be perceived and utilized by different investor classes and how it may affect prices.

Source

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Harry is a crypto enthusiast and experienced trader with a track record of success. With a deep understanding of blockchain technology, he has analyzed market trends and identified profitable opportunities, resulting in impressive returns. Harry 's expertise lies in developing effective trading strategies that leverage the potential of cryptocurrencies. Through his articles, guides, and educational resources, he shares his insights and knowledge, helping individuals make informed trading decisions. With a keen eye for market patterns, Harry has navigated the volatile crypto landscape with confidence. Stay tuned for valuable perspectives and expert advice from Harry as he contributes to the Ailtra platform.
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