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Spot Ethereum ETFs May Seize Bitcoin ETF Market Share

Spot Ethereum Etfs

An analyst claimed that spot Ethereum ETFs (exchange-traded funds) might catch as much as a fifth of the investment flows now focused on spot bitcoin ETFs.

Bitfinex head of derivatives Jag Kooner informed The Block that “forecasts show that spot Ethereum ETFs could capture between 10 and 20% of the flows that have been going into spot bitcoin ETFs.” Still, Kooner said he thinks a lot depends on future clarification on staking being permitted or rejected by the U.S. Securities and Exchange Commission for spot Ethereum ETFs.

To balance their exposure, the Bitfinex analyst gave a historical case of how fund managers split money between many similar ETFs. “The introduction of gold ETFs provides a historical parallel since they drew large investments when first launched, therefore influencing the inflows into current financial products connected to gold. Likewise, the launch of Ethereum ETFs could see fund managers shifting money to balance their exposure to both bitcoin and Ethereum,” he said.

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Kooner gave a particular case study of how fund managers had in the in the past diversified their ETF portfolios in order to distribute risk and maybe improve results.

The first gold spot ETF was introduced in November 2004, when the SPDR Gold Trust (GLD) debuted on the New York Stock Exchange. This ETF revolutionized gold trading by providing a convenient and liquid way for investors to gain exposure to gold without the need to physically hold the metal,” Kooner said.

Kooner also noted that investors added these holdings and redirected money to them, especially because of the growing need for silver for industrial uses, when silver ETFs were first launched—the iShares Silver Trust in 2006.Given Ethereum’s usage cases, “the same may hold true for spot Ethereum ETFs,” he said.

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