Trends Cryptos

Ethereum ETF demand: Why will it be lower than Bitcoin demand?

Temps de lecture : 2 minutes

The newly approved Ethereum ETF is generating mixed expectations. According to a report by Bernstein, demand for this financial product will be well below that of its Bitcoin counterpart. What are the factors influencing this projection?

Differences between Bitcoin and Ethereum ETFs

Bitcoin: a powerful catalyst

The approval of the Spot Bitcoin ETF in January marked a turning point for cryptocurrencies. This event was a powerful catalyst, propelling Bitcoin to an all-time high of $73,000 just three months after its launch. Demand for the commodity was underpinned by several key factors:

  • Familiarity and increased confidence in Bitcoin.
  • Asset scarcity and its role as a store of value.
  • Media hype and optimistic analyst forecasts.

Ethereum: more modest expectations

Bernstein’s analysts, on the other hand, do not expect the Ethereum ETF to attract the same level of interest. There are several reasons for this projection:

  • Lack of staking functionality: Unlike Bitcoin, the Ethereum ETF does not offer direct conversion into staked ETHs, making it less attractive to investors.
  • Current market situation: Economic and market conditions could dampen enthusiasm for this new product.

Bernstein’s Gautam Chhugani and Mahika Sapra point out that Ethereum, despite its strong use cases in stablecoin payments and traditional asset tokenization, will not benefit from the same driving forces as Bitcoin when it launches as an ETF.

Prospects and challenges for Ethereum

Benefits and opportunities

Despite lower anticipated demand, Ethereum remains a primary tokenization platform with significant use case potential. Bernstein highlights several strengths:

  • Increasing use in stablecoin payments.
  • Tokenization of traditional assets and funds.
  • A possible improvement in the regulatory regime to come, particularly after the US presidential elections in November.

These factors could ultimately strengthen Ethereum’s market position and increase investor interest in the ETF.

Uncertainties and challenges

However, a number of challenges remain:

  • Lack of a precise timetable: Although approval has been obtained, no launch date has been announced, adding uncertainty for potential investors.
  • Market volatility: Fluctuating cryptocurrency prices and macroeconomic conditions could negatively influence demand for the Ethereum ETF.

Despite these uncertainties, Ethereum continues to develop as an essential infrastructure for decentralized finance and other blockchain applications.

Conclusion

The approval of the Ethereum ETF marks an important milestone for the digital asset, but initial demand may not rival that of Bitcoin. The presence of distinct opportunities and challenges will shape the impact of this new financial instrument. Let’s keep a close eye on the evolution of this product and its reception by the market.

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