An analyst, Jag Kooner, has predicted that Ether ETFs will eat into the Bitcoin ETF flows by up to 20%.
Jag Kooner, the director of derivatives at Bitfinex, has made a bold assertion regarding the long-awaited arrival of spot Ether ETFs in the United States. He believes the relatively new funds can capture a substantial portion of the investment flows toward Bitcoin ETFs. Kooner expects that the Ether ETFs will capture between 10-20% of the assets; however, he thinks that a significant factor, staking, will determine the outcome.
Investors are drawn to ether exchange-traded funds (ETFs)
Kooner clarifies that his prediction will be contingent upon the regulatory approval of the US Securities and Exchange Commission (SEC) for ETFs to provide staking rewards. Investors earn interest on their holdings through the procedure of staking. Intriguingly, Ethereum has a substantial advantage over Bitcoin, which could substantially affect investor decisions.
Additionally, Kooner employed historical examples to demonstrate the extent to which Ether ETFs could consume investment flows. Upon their introduction, he recalled the immediate attraction of significant investment to gold ETFs, impacting existing gold-related financial products.
Similarly, the analyst anticipates that fund managers will now be attempting to reallocate resources. This is to attain a diversified portfolio by balancing their exposure between Bitcoin and Ethereum.
Gold: A Prominent Illustration
According to most investors, diversifying one’s portfolio distributes risk and maximizes potential returns. The Bitfinex analyst observed this after the SPDR Gold Trust (GLD)’s listing on the New York Stock Exchange in 2004. The gold ETF revolutionized the trading of gold by providing investors with a convenient method to acquire exposure without the need to hold the metal tangibly.
In 2006, investors added new positions to their portfolios due to the increasing demand for silver in various industries. This was particularly true for silver ETFs such as the iShares Silver Trust.
Considering these precedents, it is evident why Kooner believes that Ether ETFs may trigger a comparable trend. This is particularly true in light of Ethereum’s extensive range of applications, which surpass its primary function as a value storage medium.
The introduction of Ether ETF staking presents investors with an exciting opportunity despite future uncertainty. In particular, those who prefer not to place all their crypto market assets in a single basket. Therefore, the introduction of spot Ether ETFs is a significant development in the crypto industry, regardless of whether it represents a 20% reduction in Bitcoin’s market share or a positive outcome for Ethereum’s complex value.