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- Bernstein analysts forecast lower demand for Ether spot ETFs compared to Bitcoin ETFs.
- The absence of an ETH staking feature is expected to reduce spot ETH conversion.
- Bitcoin’s first-mover advantage may saturate overall demand for crypto ETFs.
A new research report from Bernstein suggests that Ethereum (ETH) spot Exchange-Traded Funds (ETFs) will likely experience investor demand, albeit on a smaller scale than their Bitcoin counterparts.
Bernstein analysts Gautam Chhugani and Mahika Sapra highlighted that the lack of an ETH staking feature in the ETF could result in less spot ETH conversion. They noted, however, that the basis trade is expected to become more attractive to investors over time.
The basis trade involves buying the spot ETF and selling the futures contract simultaneously while waiting for prices to converge. This strategy is expected to ensure ample liquidity within the ETF market.
Echoing this outlook, financial powerhouse JPMorgan suggested last month that demand for spot Ether ETFs would likely be significantly lower compared to Bitcoin ETFs. The report cited Bitcoin’s first-mover advantage and potential to dominate overall demand for crypto exchange-traded funds.
Notably, the U.S. SEC granted initial approvals for Ethereum spot ETFs last month, but the investment product awaits listing and trading as issuers’ S-1 registration statements are under review. The community anticipates the trading of Ethereum spot ETFs as early as next month.
Furthermore, the Bernstein analysts also emphasized ETH’s growing role as a primary tokenization platform. They underscored its strong use case for stablecoin payments and the tokenization of traditional assets and funds.
They also noted the need for a more refined regulatory framework for Ether and other digital assets. Bernstein anticipates that the regulatory narrative will evolve as the U.S. elections approach, particularly with the increasing likelihood of a Republican victory and former President Trump’s pro-crypto stance.
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