JP Morgan: Expecting Lower Demand for Spot ETH ETFs vs. Bitcoin

JPMorgan anticipates significantly lower demand for spot Ether (ETH) exchange-traded funds (ETFs) compared to their Bitcoin (BTC) equivalents, citing several reasons in a research report released on Thursday.

JPMorgan projects that spot Ether ETFs could attract up to $3 billion in net inflows for the remainder of this year. If staking is permitted, this figure could rise to as much as $6 billion.

“Bitcoin had the first-mover advantage, potentially saturating the overall demand for crypto assets in response to spot ETF approvals,” wrote analysts led by Nikolaos Panigirtzoglou.

Ether ETFs are nearing availability in the U.S. following the Securities and Exchange Commission’s (SEC) approval of key regulatory filings from applicants last week. However, these ETFs are not yet cleared to trade, as the SEC must also approve their S-1 filings. Bitcoin ETFs began trading in January.

The report highlighted that Bitcoin’s reward halving in April served as an additional demand catalyst for spot Bitcoin ETFs, a factor not present for Ether. Additionally, the lack of staking options for approved spot Ether ETFs makes them less attractive compared to other platforms offering staking yields.

As an application token, Ether “differs from Bitcoin in its value proposition for investors, with Bitcoin having a broader appeal by competing with gold in portfolio allocations,” the analysts wrote. They noted that Ether’s lower liquidity and smaller assets under management (AUM) make its spot ETFs less appealing to institutional investors than those of its larger rival.

The market’s initial reaction to the launch of spot Ether ETFs is likely to be negative, according to the report. Speculative investors who bought the Grayscale Ethereum Trust (ETHE) in anticipation of it being converted to an ETF are expected to take profits, potentially leading to $1 billion in outflows and putting downward pressure on Ether prices.

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