Spot Ether (ETH) exchange-traded funds won’t see the same day-one inflow as spot Bitcoin ETFs did, as the asset’s use cases are far more difficult to value, an industry executive warns.

Challenges in Valuing Ethereum’s Use Cases

The spot Bitcoin ETFs saw $655.2 million of inflows on the opening day of trading on Jan. 11, exceeding industry expectations at the time.

While Bitcoin offers a steady store of value use case, the metrics used to value Ethereum’s technology-driven investment use cases are far less clear, Stephen Richardson, Fireblocks’ managing director of financial markets.

“What’s missing is widespread consensus that effectively evaluates the utility or utilization rate of the Ethereum blockchain.”

“The right value metrics and drivers need to first be created to be able to assess the adoption or utilization of the technology to then derive its value,” Richardson added.

As a result, “we’re likely not going to see the same levels of inflows on day one with the Ether ETFs as we saw with the Bitcoin ETFs,” he concluded.

Bitwise’s BITB product saw the most inflows on the first day spot Bitcoin ETFs launched at $237.9 million, followed by Fidelity’s FBTC ($227 million) and BlackRock’s IBIT ($111.7 million), BitMEX Research data shows.

Potential Metrics for Evaluating Ethereum

Discussing how one would evaluate Ethereum, Richardson suggested looking at total value locked, which is a metric that can already be used to value Ethereum and layer 2 blockchains on top of it. However, Richardson hinted that he would like to see more.

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VanEck, one of the recently approved spot Ether ETF applicants, recently suggested that transaction volume, the number of users, and validators could be used to assess Ethereum adoption and utilization.

Asked what the strongest one-liner is to convince potential investors on the spot Ether ETFs, Richardson said Ethereum is the “best bet” to dominate the digital native space and bridge more retail and institutional investors on-chain.

“Ethereum’s value is intrinsically linked to the use cases that are being built on top of it, so investors are making a bet on the utilization of the software itself.”

Last week, Markus Thielen, head of research at 10x Research, suggested Ethereum could be pitched as a “network empowering the future of finance.”

However, Thielen said the revenue Ethereum is producing is “minuscule” relative to its $455 billion market cap, which doesn’t mean it is a “viable, sufficiently cash-flow-producing investment.”

Ethereum’s staking yields are also inferior to United States treasury yields, Thielen added.

SEC Approval of Ether ETF’S and Future Projections

On May 23, the SEC approved 19b-4 applications from VanEck, BlackRock, Fidelity, Grayscale, Bitwise, Franklin Templeton, ARK 21Shares, and Invesco Galaxy to issue spot Ether ETFs.

Those approved must wait until the SEC signs off their Form S-1 filings for the ETFs to start trading.

If that happens, Bloomberg ETF analysts Eric Balchunas and James Seyffart expect the ETFs to capture somewhere between 10-20% of the flows that the spot Bitcoin ETFs have seen.

According to Farside Investors, spot Bitcoin ETFs have tallied $13.8 billion in net inflow since the products launched roughly four and a half months ago.

Capturing 15% of that would still see spot Ether ETFs tally a combined $2.07 billion over the same timeframe, which is still impressive by industry standards.