Bernstein and JPMorgan both call for Ethereum spot ETF demand far below Bitcoin, what are the differences in views?

According to a report cited by Coindesk, Bernstein predicts that the demand for Ethereum spot ETFs is expected to be significantly lower than that of Bitcoin spot ETFs. This aligns with previous views from JPMorgan, emphasizing that ETH lacks the demand catalyst of Bitcoin halving, and that Bitcoin investors' value proposition differs significantly from that of ETH, making them incomparable.

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Bernstein: Ethereum and Bitcoin are fundamentally different

Ethereum spot ETF lacks staking function

Bernstein analysts Gautam Chhugani and Mahika Sapra predicted the demand for an Ethereum spot ETF in their report on Monday, stating that its scale will be far smaller than that of a Bitcoin spot ETF, and pinpointed the reason:

Due to the lack of staking function in the Ethereum spot ETF, the demand for spot conversion will be relatively low.

In other words, while the Ethereum spot ETF allows investors to hold ETH through traditional financial channels, most ETH holders are actively participating in the Ethereum ecosystem to earn rewards provided by staking platforms.

Therefore, instead of buying an Ethereum spot ETF, investors may find it more capital-efficient and profitable to hold actual ETH directly on the blockchain.

The analysts also noted that despite the recent pullback in the crypto market, institutional adoption continues to grow as expected.

They expect that in the future, the main liquidity providers in the Ethereum spot ETF market will be basis trading traders, who facilitate liquidity in the ETF market through arbitrage between spot ETFs and futures contracts.

Ethereum's primary use case is tokenization platform

At the same time, the analysts clarified the fundamental differences between Ethereum and Bitcoin:

ETH, as a primary tokenization platform, is establishing strong use cases for stablecoin payments and tokenization of traditional assets RWAs.

Yesterday, Bloomberg analyst Eric Balchunas and SEC Chairman Gary Gensler expressed optimism about the approval progress of the Ethereum spot ETF, with the former stating that the Ethereum spot ETF could be approved for listing as early as July 2nd, a development eagerly awaited by investors.

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Crypto regulation to become clearer around the time of the election

Finally, in the face of the still unclear crypto regulation landscape, analysts acknowledge that digital assets, including ETH, require more robust regulatory frameworks, a situation that may improve around the time of the U.S. election in November:

As the likelihood of a Republican victory increases and with its presidential candidate Trump leaning towards supporting cryptocurrencies, related regulations are expected to improve.

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JPMorgan: Bitcoin spot ETF has first-mover advantage

Previously, Wall Street giant JPMorgan also made predictions about the market size of an Ethereum spot ETF, stating that it could attract up to $3 billion in net inflows this year, but compared to the Bitcoin spot ETF market, it is still a small fish in a big pond.

Bitcoin has first-mover advantage

Analyst Nikolaos Panigirtzoglou shared the same opinion as Bernstein in the report, believing that the scale of an Ethereum spot ETF will be much smaller than that of a Bitcoin spot ETF:

Bitcoin spot ETF already has a first-mover advantage, which may have saturated the overall demand for crypto assets.

He added, "Bitcoin competes with 'gold' in investors' portfolio allocations, which makes it more attractive to investors compared to Ethereum."

Bitcoin has halving drive, Ethereum does not

Additionally, in terms of market dynamics, the Bitcoin halving event as a potential bullish event is also an additional catalyst for creating demand for a Bitcoin spot ETF:

In contrast, Ethereum lacks a similar driving force.

10x Research: Bitcoin's upward momentum comes from macro factors, halving, and ETF are not necessarily positive

Ethereum's liquidity is not as strong as Bitcoin

Finally, the analysts also mentioned that due to the less active trading activity in the Ethereum market compared to Bitcoin, and the lower total assets under management (AUM), institutional investors may not be as interested in an Ethereum spot ETF as they are in a Bitcoin spot ETF.

Overall, JPMorgan believes that the initial market response to an Ethereum spot ETF may be negative and could put downward pressure on the price of ETH.