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Industry Experts Anticipate No Institutional Demand for Ethereum ETFs

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In the cryptocurrency market, the buzz around Bitcoin ETFs (exchange-traded funds) has been monumental. Yet, when it comes to Ethereum, the second-largest crypto by market capitalization, the excitement seems muted.

According to industry leaders, a combination of market dynamics, investor understanding, and the unique attributes of Ethereum itself may be the reason behind it.

Institutional Interest in Ethereum ETFs

Raoul Pal, CEO of Real Vision, highlighted a crucial difference between Bitcoin and Ethereum. “Ethereum offers a broader-based technology bet and yields that Bitcoin does not,” he stated. This distinction is vital for institutional investors, who are not just looking for price appreciation but also additional benefits.

Pal argued that if Ethereum ETFs do not offer staking yields, institutions may prefer to own Ethereum directly. This preference is because holding the asset allows them to stake it and earn yields, an option not typically available through ETFs.

For instance, at Coinbase, Ethereum stakers currently receive an annual yield of 3.46% when they hold ETH for a year. Presently, the staking ratio for Ethereum, which reflects the proportion of eligible tokens actively engaged in staking, is at 23.32%.

The idea of Ethereum ETFs, therefore, may become less attractive to institutional investors, who could see more benefit in direct ownership. Pal raised concerns about the possible dynamics, where asset managers could capitalize on the staking yields without passing these benefits to ETF holders. This scenario could lead to a lack of institutional interest in Ethereum ETFs.

A lot of the institutions would prefer to own ETH itself because then they can stake it and get yield. If you don’t give them yield, some asset manager who launches the ETF is going to get rich. [For example

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Author: Bary Rahma

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