Bernstein Analysts Turn Bearish On Spot Ethereum ETFs, Lack Of Staking Raises Concerns

Analysts at global asset management firm, Bernstein have expressed bearish sentiment for Spot Ethereum ETFs prospects. According to Bernstein analysts, Gautam Chhugani and Mahika Sapra, Spot Ethereum ETFs may see less demand than Spot Bitcoin ETFs due to a lack of staking features.

Analysts Predict Sluggish Demand For Spot Ethereum ETFs

In a new research report published on Monday, Bernstein analysts suggested that Spot Ethereum ETFs will likely experience a wane in investor demand following its launch. The analysts painted a bearish picture for the recently approved investment asset, noting that the enthusiasm for Ethereum Spot ETFs might be on a smaller scale than the initial excitement for Spot Bitcoin ETFs. 

Chhugani and Sapra attributed their pessimistic predictions to the lack of ETH staking features in Spot Ethereum ETF filings. However, they wrote that the “basis of trade” for Spot Ethereum ETFs may likely improve over time, attracting more investors and ultimately improving liquidity. 

The analysts also wrote that the basis of the trade would involve a unique strategy where investors purchase Spot Ethereum ETFs and sell futures contracts while waiting for prices to converge. This approach would potentially ensure that the ETF market gains ample liquidity and sustainability. 

Considering Bernstein’s bearish outlook for Spot Ethereum ETFs, a potential drop in investor demand could lead to significantly reduced inflows. This outcome would be a stark contrast to the strong inflows observed after the launch of Spot Bitcoin ETFs. 

After the United States Securities and Exchange Commission (SEC) approved Spot Bitcoin ETFs on January 10, and it launched a day after, millions of inflows flooded the market within a few days, fueled by investors’ demand and prior anticipation for the digital assets. These massive inflows also contributed to Bitcoin’s rise to new all-time highs above $73,000.

Bloomberg Analyst Reinforces Ethereum ETFs Launch Date

Spot Ethereum ETFs are likely to hit the market by July 2024. According to senior Bloomberg analyst, Eric Balchunas, asset management firm, VanEck has filed its 8-A form for Spot Ethereum ETFs. The analyst disclosed in an X (formerly Twitter) post that approximately seven days after VanEck filed the same form for Spot Bitcoin ETFs, the ETFs launched.

Uncanningly, July 2, about seven days after  VanEck’s recent 8-A filing, is the date Balchunas predicted for the launch of Spot Ethereum ETFs. The Bloomberg analyst has doubled down on his previous prediction, indicating that Ethereum Spot ETFs could debut on this date. 

Responding to his post, a crypto community member inquired about the inclusion of staking in features for the Ethereum Spot ETFs. Balchunas clarified with a “no,” indicating the SEC’s concerns about the classification of staking as an unregistered security. The community member further pointed out that the absence of staking would render Ethereum Spot ETFs significantly less appealing than their Bitcoin versions. 

Featured image created with Dall.E, chart from Tradingview.com