Ethereum is digital silver, Ethereum spot ETF could attract 10% of Bitcoin ETF funds

People have always regarded Bitcoin as digital gold, possessing the same hedging value as gold. Can Ethereum, with smart contracts, be seen as digital silver? Using the example of gold and silver ETFs on Bitfinex, an Ethereum spot ETF has the potential to capture 10-20% of the funds currently flowing into Bitcoin ETFs.

Ethereum ETF to Capture 10-20% of Bitcoin ETF Flows

According to a report by The Block, Jag Kooner, the head of derivatives at Bitfinex, stated that Ethereum exchange-traded funds (ETFs) could capture 10-20% of the funds currently flowing into Bitcoin ETFs.

A Bitfinex analyst provided a historical example of how fund managers transfer funds among various related ETFs to balance risks. The launch of Gold ETFs provides a historical parallel, as new Gold ETFs attracted significant investments, influencing the flow of existing financial products related to gold. Similarly, the introduction of Ethereum ETFs could lead fund managers to reallocate funds to balance their exposure to Bitcoin and Ethereum.

The first Gold ETF was launched in November 2004, with the SPDR Gold Trust (GLD) debuting on the New York Stock Exchange, fundamentally changing gold trading by providing investors with a convenient and liquid way to invest in gold without physical ownership. When the first Silver ETF was introduced in 2006, investors increased their positions and shifted funds into it, particularly due to the increasing industrial demand for silver.

Therefore, it is speculated that if an Ethereum spot ETF is officially launched, it could capture 10-20% of the funds currently flowing into Bitcoin ETFs.

Bitcoin as Digital Gold, Ethereum as Digital Silver

Bloomberg ETF analyst Eric Balchunas also studied Silver ETFs and Gold ETFs, viewing Ethereum as playing a role similar to silver.

While Bitcoin is often seen as digital gold, possessing hedging value similar to gold, likening Ethereum to silver also has its merits. Both silver and gold are precious metals that were considered currencies in ancient times. However, silver is also a vital industrial metal, ranking high in electrical and thermal conductivity among metals, with extensive applications in electronics, photography, pharmaceuticals, and chemical industries.

Compared to Bitcoin's payment applications, ETH has more utility and embedded applications, supporting the argument for Ethereum being referred to as digital silver.

However, Balchunas estimates that if an Ethereum spot ETF performs around 10% of a Bitcoin spot ETF, it would already be considered quite successful.