Ether spot ETFs are expected to receive a significant amount of net inflows, according to a recent report. The inflows are projected to be around 30%-35% of what bitcoin ETFs receive. This estimation translates to a potential $4.7 billion to $5.4 billion of net inflows over the course of six months. However, there are factors that could dampen these inflows, such as the lack of staking and bitcoin’s advantage as the first mover in the market.
The report, conducted by Citi, suggests that the distribution of net inflows for spot ether ETFs may lean towards the lower end of the range. This is due to the fact that while ether may offer diversification benefits in the long run because of its different use cases, this is not currently the case. Investors who are interested in spot ETFs may see bitcoin and ether as similar enough to divide their investments between the two, rather than treating them as distinct assets.
One of the potential reasons for underwhelming flows into ether ETFs is the absence of staking. Additionally, bitcoin has an advantage as the cryptocurrency that entered the market first, attracting significant inflows and outperforming ether prior to the approval of ether ETF listings in May.
Despite these challenges, there is a silver lining. The launch of spot ether ETFs may coincide with a more accommodative stance from the Federal Reserve, resulting in lower interest rates, a stronger stock market, and a weaker U.S. dollar. This macroeconomic environment could be favorable for the crypto market as a whole.
Overall, while there are obstacles to overcome, there is optimism surrounding the potential for significant net inflows into ether spot ETFs in the coming months. As the market continues to evolve and adapt, it will be interesting to see how investors respond to the introduction of these new investment opportunities.