According to a report by CoinDesk, JPMorgan stated in a research report on Thursday that the demand for Ethereum spot ETFs will be far lower than similar Bitcoin fund products for various reasons. Analysts led by Nikolaos Panigirtzoglou at JPMorgan wrote that the SEC approved the 19b-4 proposal related to Ethereum spot ETFs last week, but investors still need to wait for the S-1 registration statement submitted by the fund issuer to start trading such fund products. The Block reported on Thursday, citing two sources, that the SEC has requested Ethereum spot ETF issuers to submit their S-1 draft filings by Friday, with Bloomberg analysts expecting a listing by the end of June.
Excluding the collateral mechanism will reduce the attractiveness of Ethereum spot ETFs. JPMorgan also expects net inflows of up to $3 billion in Ethereum spot ETFs for the rest of the year, but the bank stated that the figure could rise to $6 billion if such products were allowed to collateralize. The report pointed out that the Bitcoin halving in April this year was an additional catalyst for Bitcoin spot ETF demand, which Ethereum is unlikely to have in the future. JPMorgan stated that approved Ethereum spot ETFs lack a collateral mechanism compared to other platforms offering yield on collateral, which will reduce the attractiveness of such products.
The author wrote that Ethereum, as a utility token, “has a different value proposition to investors than Bitcoin, which competes with gold in portfolio allocation and has a broader appeal.” JPMorgan also pointed out that lower liquidity and lower assets under management (AUM) will make Ethereum spot ETFs less attractive to institutional investors than their larger competitors.
Grayscale Ethereum Trust Fund may see $1 billion outflows. The initial market response to the launch of Ethereum spot ETFs may be negative, as speculators who bought Grayscale Ethereum Trust (ETHE) in anticipation of its conversion to an ETF may liquidate their profits. The report stated that ETHE could see $1 billion in outflows, putting downward pressure on the price of Ethereum. According to previous reports by Zombit, cryptocurrency data provider Kaiko stated that if Grayscale’s ETHE follows a similar pattern to its Bitcoin Trust Fund (GBTC) in the first month after conversion, it could see daily outflows of $110 million.