According to cryptocurrency research firm K33 Research, the US Ether spot ETF could attract net capital inflows of $3.1 billion to $4.8 billion in the first five months of trading. K33 senior analyst Vetle Lunde and DeFi analyst David Zimmerman stated in a report released on Tuesday that their estimates were based on a comparison of the market sizes between Bitcoin (BTC) and Ether (ETH).
According to the analysts, approximately 3.3% of the circulating supply of Ether is currently held in investment vehicles, and this percentage has been steadily declining since the previous crypto bull market peak in November 2021. This trend is similar to Bitcoin, where the percentage of Bitcoin held in investment vehicles decreased to 4.1% before the Bitcoin spot ETF frenzy and later grew to 5.6%.
The analysts also added that globally, the assets managed by Ether ETPs represent about 28.2% of the assets managed by similar Bitcoin products (excluding US Bitcoin spot ETFs), while in Canada and Europe, this proportion is approximately 33%. Although the introduction of the US Ether futures ETF has reduced this global proportion to only 5% of the Bitcoin futures ETF, the analysts believe that this is due to mismatched launch times and does not represent investment demand.
The analysts further added that applying the weights of these comparable markets to the total net inflows of $14 billion into the Bitcoin spot ETF since its launch in January, K33’s estimate suggests that the Ether spot ETF could accumulate between 800,000 to 1.26 million Ether in the first five months, which is equivalent to 0.7% to 1.05% of the circulating supply of Ether.
The lack of a staking mechanism will not hinder demand
The US Securities and Exchange Commission (SEC) approved the 19b-4 proposal related to Ether spot ETFs on May 23, bringing these funds one step closer to potential listing. However, investors still need to wait for the SEC’s approval of the S-1 registration statement submitted by the fund issuers before trading such ETFs can begin.
The Ether spot ETFs will not generate staking rewards upon launch, which seems to be a key factor in obtaining SEC approval for these products. While some believe that the lack of a staking feature could lead to a decrease in demand for Ether spot ETFs considering the opportunity cost, K33 analysts disagree with this view, stating that:
“Data source: Related report: ‘JPMorgan: Market demand for Ether spot ETF may be much lower than Bitcoin ETF’.”
