Spot Ethereum ETFs Will Only Capture 20% Of The Volume That Bitcoin ETFs Currently Command, Analyst Predicts

With the SEC granting an in-principal approval to spot Ethereum ETFs last week, many expect these Ether-denominated investment vehicles to replicate

The SEC granted an in-principal approval to spot Ethereum ETFs last week, prompting many to anticipate a replication of the extraordinary success witnessed by their Bitcoin-based counterparts. However, based on the gold vs. silver analogy, such an occurrence commands a fairly remote probability.

Last week saw the SEC grant an in-principal approval to the Grayscale Ethereum Trust, the Bitwise Ethereum ETF, the iShares Ethereum Trust, the VanEck Ethereum Trust, the ARK 21Shares Ethereum ETF, the Invesco Galaxy Ethereum ETF, the Fidelity Ethereum Fund, and the Franklin Ethereum ETF.

None of the approved ETFs, however, allow for staking on the Ethereum network, which appears to be a necessary opportunity cost to ensure sufficient liquidity for smooth fund operations, especially as Ethereum's standard exit queue limits the number of stakers who are allowed to exit on a given day.

I'm also looking at silver ETFs vs gold ETFs where silver has 15% share.. as I think ether will be seen similar to silver. Many won't feel need to go beyond bitcoin/gold for their crypto/precious metals allocation. pic.twitter.com/VIj3gh4jMl

— Eric Balchunas (@EricBalchunas) May 29, 2024

As investors eagerly await the trading debut of these investment vehicles, some analysts are tempering expectations. For instance, Bloomberg's senior ETF analyst, Eric Balchunas, expects spot Ethereum ETFs to hover at around 20 percent of the volume that spot Bitcoin ETFs currently command.

I'm also looking at silver ETFs vs gold ETFs where silver has 15% share.. as I think ether will be seen similar to silver. Many won't feel need to go beyond bitcoin/gold for their crypto/precious metals allocation. pic.twitter.com/VIj3gh4jMl

— Eric Balchunas (@EricBalchunas) May 29, 2024

This prognostication is not only supported by the relatively muted performance of Ether-denominated futures relative to their Bitcoin-based counterparts but also the historical outperformance of gold ETFs vs. the silver-based ones. As can be gleaned from the above X post, gold ETFs currently dominate the precious metals ETF space with an 85 percent market share.

More context on just how absurd $IBIT is, there's only been one ETF in history to reach $20b in assets in under 1000 days. $JEPI, which did it in 985 days. $IBIT is a hair away at 137 days. Chart via @thetrinianalyst pic.twitter.com/ensYnZ65z5

— Eric Balchunas (@Eric Balchunas) May 29, 2024

Meanwhile, we reported yesterday that BlackRock's iShares Bitcoin Trust ETF (IBIT) has finally eclipsed the holdings of the Grayscale Bitcoin Trust ETF (GBTC) to become the largest spot Bitcoin-based investment vehicle in the world. What's more, IBIT is about to become the first ETF in history to reach $20 billion in assets in sub-200 days.

Maybe you should just go on holidays in June.#Bitcoin pic.twitter.com/FudUY6lSZL

— André Dragosch | Bitcoin & Macro ⚡ (@Andre_Dragosch) May 29, 2024

As to the fate of Bitcoin's ongoing bullish cycle, we noted recently that it generally takes Bitcoin's miners two to five months to recover from the post-halving upheaval, which then paves the way for new all-time highs. Based on this timeline, Bitcoin should resume scaling new zeniths some time in Q3, which aligns with the seasonality-based dampening factor over the summer.

Lastly, do note that Bernstein analysts now expect the spot Bitcoin ETFs to grow to a cumulative size of nearly half a trillion dollars. Consequently, the investment firm expects the world's largest cryptocurrency to reach the $90,000 price level by the end of 2024, and hit a cyclical high of $150,000 in 2025.