Ether ETFs Face Day-One Challenges vs Bitcoin
An industry executive warns that spot Ether (ETH) exchange-traded funds (ETFs) won’t experience the same initial influx as spot Bitcoin ETFs did due to the complexities in valuing Ethereum's use cases.
Strong Start for Spot Bitcoin ETFs
Spot Bitcoin ETFs attracted a remarkable $655.2 million in inflows on their opening day of trading on Jan. 11, surpassing industry expectations.
Ethereum's valuation challenges
Stephen Richardson, managing director of financial markets at Fireblocks, highlights the difficulty in valuing Ethereum's technology-driven investment use cases compared to Bitcoin's stable store of value. He emphasizes the necessity of establishing appropriate metrics and drivers to assess Ethereum's adoption and derive its value.
Day-One Expectations for Other ETFs
Richardson anticipates that spot Ether ETFs won’t achieve the same level of day-one inflows as Bitcoin ETFs due to Ethereum's valuation complexities.
Evaluation Metrics for Ethereum
Richardson suggests considering metrics such as total value locked to assess Ethereum and layer 2 blockchains. However, he expresses a desire for additional valuation indicators.
Potential Evaluation Indicators
VanEck, one of the recently approved spot Ether ETF applicants, proposes assessing Ethereum adoption and utilization through metrics like transaction volume, user count, and validators.
Selling Point for Spot Ether ETFs
Richardson asserts that Ethereum is the top contender in the digital native realm, poised to bridge retail and institutional investors onto the blockchain, making it an appealing investment opportunity.
