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JPMorgan Predicts Significantly Lower Demand For Spot Ethereum ETFs

Leading bank JPMorgan has taken a pessimistic stance and predicted that demand for spot Ethereum ETFs will be significantly lower than that for their Bitcoin ETF counterparts due to several factors. 

The United States Securities and Exchange Commission had approved key regulatory filings from ETF applicants last week. 

JPMorgan Expects Low Demand 

According to JPMorgan’s research report, the banking giant expects spot Ethereum ETFs to attract about $3 billion in net inflows for the rest of the year. However, it stated that the figure could rise to $6 billion if staking is permitted. According to the analysis, Bitcoin had a first-mover advantage and potentially saturated overall demand. 

“Bitcoin had the first mover advantage, potentially saturating the overall demand for crypto assets in response to spot ETF approvals.”

The SEC cleared key regulatory filings related to spot Ethereum ETFs last week. However, they are yet to begin trading because the regulator has yet to approve their S-1 filings. According to JPMorgan, the April Bitcoin halving event acted as an additional catalyst for spot Bitcoin ETFs, but there was no similar impetus for ETH in the near future. Additionally, the lack of staking for approved spot Ethereum ETFs made them less attractive compared to other platforms offering staking yields. 

“Ether as an application token “differs from bitcoin in its value proposition for investors with bitcoin having a broader appeal by competing with gold in portfolio allocations.”

The bank noted that lower liquidity and lower assets under management would also make spot Ethereum ETFs less attractive to institutional investors. 

An Abrupt Shift In Approvals 

In a surprising move, the SEC approved spot Ethereum ETFs, leading to some analysts speculating that the move could be politically motivated. The SEC’s re-engagement with stakeholders led to the approval of 19b-4 forms of eight applicants: Grayscale, Bitwise, BlackRock, VanEck, Ark 21Shares, Inve­sco, Fidelity, and Franklin Templeton. 

Other ETF Approvals May Face Hurdles

JPMorgan also expressed skepticism regarding the approval of additional crypto ETFs such as Solana, citing the SEC’s stance on classifying most cryptocurrencies as securities, creating significant hurdles. 

“The decision by the SEC to approve ETH ETFs is already a stretch given the ambiguity about Ethereum’s classification. We believe the SEC is unlikely to go further by approving Solana or other token ETFs, considering their stronger view on these assets being securities compared to Ethereum.”

JPMorgan’s pessimistic outlook starkly contrasts with the optimism expressed by other analysts. Standard Chartered’s Geoffrey Kendrick has predicted that Solana and XRP ETFs could be greenlit in 2025. TD Cowen’s Jaret Speilberg also anticipates the approval of a wide range of crypto ETFs, including basket funds that encompass multiple tokens.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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