Spot Ethereum exchange-traded funds are set to launch in the US on Tuesday, but they may not gain as much traction as their Bitcoin counterparts. According to market maker Wintermute, Ethereum ETFs are expected to attract only 10% to 12.5% of the assets that Bitcoin ETFs have garnered since their launch in January.
One major reason for this disparity is the lack of a staking mechanism in Ethereum ETFs. Staking allows investors to lock their Ether holdings in the network and earn a 3% yield, paid out in Ether. Without this feature, some investors may be hesitant to jump into Ethereum ETFs.
Additionally, investors in Ethereum ETFs will have to pay management fees ranging from 0.15% to 2.5%, further reducing the appeal of these investment vehicles. Analysts like Adam Morgan McCarthy from Kaiko Research believe that paying these fees without the staking element may not be attractive to many investors.
However, there is still hope for Ethereum ETFs to gain more traction in the market. If there is a change in leadership at the Securities and Exchange Commission following the US presidential election, Ethereum ETFs could potentially implement a staking feature, making them more appealing to investors.
Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart have a more optimistic view, predicting that Ethereum ETFs could attract between 15% to 25% of the assets that Bitcoin ETFs have accumulated. This would mean US Ethereum ETFs could amass between $4.8 billion and $8 billion in assets within a year.
As the launch of Ethereum ETFs approaches, the crypto community is eagerly watching to see how these investment vehicles will perform in the market. Stay tuned for more updates on this developing story.