K33: US Ether ETF May Attract Over 1 Million ETH in First 5 Months

K33: US Ether ETF May Attract Over 1 Million ETH in First 5 Months

K33: US Ether ETF May Attract Over 1 Million ETH in First 5 Months

According to cryptocurrency research firm K33 Research, the US Ether spot ETF may attract a net capital inflow 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 distributed on Tuesday (4th) that their estimate is based on the comparison of the market size between Bitcoin (BTC) and Ether (ETH).

According to the analysts, currently about 3.3% of the circulating supply of Ether exists in investment vehicles, and this has been steadily declining since the previous peak of the crypto bull market in November 2021. This trend is similar to Bitcoin’s situation, where the circulating supply of Bitcoin held in investment vehicles decreased to 4.1% before the trend of Bitcoin spot ETFs emerged, and later grew to 5.6%.

The analysts added that globally, the assets managed by existing Ether ETPs account for about 28.2% of the assets managed by similar Bitcoin products (excluding US Bitcoin spot ETFs), while in Canada and Europe, this proportion is about 33%. Although the introduction of the US Ether futures ETF reduced this global proportion to only 5% of its Bitcoin futures ETF, the analysts believe that this is due to the mismatch in their respective launch times and does not represent investment demand.

The analysts further stated that applying the weight of these comparable markets to the total net inflow of $14 billion into Bitcoin spot ETFs since their launch in January, K33’s estimate suggests that Ether spot ETFs may accumulate 800,000 to 1.26 million Ether in the first five months, 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 the potential listing of these funds one step closer. However, investors still need to wait for the SEC’s approval of the S-1 registration statement submitted by the fund issuer before trading such ETFs can begin.

Ether spot ETFs will not generate staking rewards upon launch, which seems to be a key factor in obtaining SEC approval for these products. Although some believe that the lack of a staking function may lead to a decrease in demand for Ether spot ETFs considering the opportunity cost, the K33 analysts disagree with this view. They stated:

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Related report: “JPMorgan: Market Demand for Ether Spot ETF May Be Far Lower Than Bitcoin ETF”