Markets
Ether (ETH) ETFs May See Disappointing Demand, Predict Wintermute and Kaiko
A Few Prominent Cryptocurrency Firms See Relatively Quiet Debut of Exchange-Traded Funds That Hold Ethereum’s Ether (ETH).
Wintermute, a major market maker, estimates that ether ETFs will garner a maximum of $4 billion in investor inflows over the next year. That’s less than the $4.5 billion to $6.5 billion most analysts expect — and the latter figure is already about 62% below the $17 billion that bitcoin ETFs have garnered so far since they began trading in the U.S. six months ago.
Wintermute, however, predicts that the price of ether will gain up to 24% over the next 12 months, thanks to these inflows.
The ETFs received final approval from regulators Monday night, meaning issuers including BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Bitwise, 21Shares and Invesco can begin offering the funds and they can begin trading Tuesday.
U.S. regulators have declined to accommodate issuers’ requests to allow Ether ETFs to stake the cryptocurrencies they own, which would have generated revenue that could have been shared with investors. “This loss reduces the competitiveness of ETH ETFs relative to direct holdings, where investors can still benefit from staking,” Wintermute said in its report.
Research firm Kaiko shares a similar perspective based on previous Ethereum-focused launches.
“The launch of futures-based ETH ETFs in the US late last year was met with disappointing demand,” Will Cai, head of indices at Kaiko, said in a report. “All eyes are on the launch of spot ETFs with high hopes for rapid asset accumulation.”
He said that regardless of the long-term trend, the price of ether will likely be “sensitive” to inflow numbers in the first few days of trading.
According to data tracked by Kaiko, Ether implied volatility increased sharply over the weekend, with contracts closest to expiration (July 26) rising from 59% to 67%.
“This suggests lower conviction around the ETH launch as traders are willing to pay higher premiums to cover their bets,” the report said.
UPDATE (July 22, 2024, 9:19 p.m. UTC): Updates to note that the ETFs have received final approval and can begin trading on Tuesday.