Key Points
- Spot Ethereum ETFs could potentially attract 10-20% of the current investment flows directed towards spot Bitcoin ETFs.
- The introduction of Ethereum ETFs might prompt fund managers to diversify their portfolios between Bitcoin and Ethereum.
An analyst predicts that spot Ethereum ETFs could attract as much as 20% of the investment flows that are currently directed towards spot Bitcoin ETFs.
Dependent on Regulatory Clarity
However, the analyst, Jag Kooner, believes that a lot hinges on future clarity regarding whether staking will be permitted or prohibited by the U.S. Securities and Exchange Commission for spot Ethereum ETFs.
Kooner provided a historical example of how fund managers diversify funds between various related ETFs to balance their exposure.
Historical Precedents
He drew parallels with the launch of gold ETFs, which, upon introduction, attracted substantial investment, thereby impacting the inflows into existing financial products related to gold.
Likewise, the introduction of Ethereum ETFs could lead fund managers to reallocate resources to balance their exposure to both Bitcoin and Ethereum.
Kooner also cited the example of how fund managers diversified their ETF portfolios in the past to spread risk and potentially enhance returns.
He mentioned the introduction of the first gold spot ETF in November 2004, the SPDR Gold Trust (GLD), which revolutionized gold trading by providing a convenient and liquid way for investors to gain exposure to gold without the need to physically hold the metal.
When silver ETFs were introduced, investors added these positions and diverted funds to them, particularly due to the increasing demand for silver for industrial uses.
“The same may hold true for Ethereum spot ETFs given Ethereum’s use cases,” he added.
Ethereum’s price slightly declined by 0.65% over the past 24 hours and was trading at $3,667 at 5:41 a.m. ET.
The GM 30 Index, which represents a selection of the top 30 cryptocurrencies, decreased by 1% to 141.79 in the same period.