According to a research report by Citi, spot Ethereum (ETH) exchange-traded funds (ETFs) in the U.S. are projected to attract net inflows at only 30%-35% of the levels observed for spot Bitcoin (BTC) ETFs. This estimation translates to anticipated net inflows ranging from $4.7 billion to $5.4 billion over a six-month period. However, Citi analysts cautioned that these figures might be optimistic, considering potential lower-than-expected inflows and Ethereum’s return beta relative to such flows.
Spot Ethereum ETFs are slated to become available for trading in the U.S. next week following approval from the Securities and Exchange Commission (SEC) earlier this year. Despite Ethereum’s broader range of applications, which offer potential long-term diversification benefits, Citi pointed out that these advantages have yet to be fully realized.
One factor contributing to the subdued expectations is the absence of staking options in Ethereum spot ETFs, which could dampen investor interest. In contrast, Bitcoin’s earlier approval and first-mover advantage secured significant inflows and strong performance before Ethereum’s ETF approval in May.
Nevertheless, Citi’s report highlighted a potentially favorable macroeconomic backdrop coinciding with the launch of spot Ethereum ETFs. The Federal Reserve’s increasingly dovish stance, signaling lower interest rates, a resilient equity market, and a weaker U.S. dollar, could create a conducive environment for the broader cryptocurrency market.
Despite cautious projections, the imminent introduction of Ethereum ETFs represents a significant milestone, potentially expanding investor access to the second-largest cryptocurrency by market capitalization in the U.S. market.
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