Ethereum ETFs Can Frustrate Investors – Here's Why

While some predict a strong inflow of funds, others warn that demand may not reach the levels seen in Bitcoin ETFs.

Optimism for Ethereum ETF

Matt Hoogan predicts inflow of $15 billion into ETN ETFs over the next 18 months based on the market capitalization of Ethereum against Bitcoin and data from international ETF markets.

Hogan estimates that by the end of 2025, Bitcoin ETFs will hold $100 billion. After taking into account the data on international markets and the lack of profitable "carry trade” strategy for Ethereum, he has reached the $15 billion forecast.

"Carry trades” is a trading strategy involving borrowing funds at a lower interest rate to invest in an asset with a higher yield. For example, Bitcoin ETF investors can profit by buying spot Bitcoin and selling BTC futures contracts. However, due to differences in ETH futures market structure, liquidity, and lack of staking, such a strategy is unlikely for Ethereum.

Cautious forecasts by JPMorgan and others

JPMorgan analysts have a more conservative forecast, expecting inflows of $1-$3 billion for ETH ETFs. They argue that Ethereum lacks the first-mover advantage, as well as the halving event that gave Bitcoin ETFs a boost. Ethereum's Proof of Stake (PoS) mechanism also plays a role in their cautious forecast.

However, the amount of ETH staked has shown a positive trend since January 2024, coinciding with the launch of the Bitcoin ETF.

Formerly Bernstein guessed , that holding Ethereum directly can be more profitable without staking, as the fund's expense ratio can be a burden to investors. That's part of the reason why VanEck plans to reduce its fees initially.

Competitive landscape and future prospects

Bloomberg chief analyst Eric Balchunas noted , that an Ethereum ETF can only attract about 10% of the inflows that Bitcoin ETFs have achieved, highlighting a significant gap.

Christopher Perkins, president of VC firm CoinFund, mentioned to Fortune that Ethereum's main challenge is branding. The weak reaction to the October 2023 ETH futures relaunch may repeat itself on the spot debut.

Conclusion

Anticipation surrounding the launch of the Ethereum ETF brings a mix of bullish predictions and cautious views. While these ETFs may not reach Bitcoin's levels of success, they can still surprise the market with their market performance.