Ahead of the anticipated launch of spot Ethereum ETH/USD ETFs in the U.S., Citi C projects up to $5.4 billion in inflows within the first six months.
What Happened: The report, released last week, indicates that these inflows would be at 30%-35% of the levels seen by spot Bitcoin ETFs, CoinDesk reported. The bank cautioned that actual inflows and returns could be lower than projected.
Analysts led by Alex Saunders noted that Ethereum offers long-term diversification benefits due to its varied use-cases. However, these benefits are not currently reflected in the market.
Spot ETFs are set to begin trading in the U.S. next Tuesday after gaining approval from the Securities and Exchange Commission (SEC).
Citi also mentioned that investors might split their allocations between BTC and ETH, viewing them as similar assets. This could result in Ethereum receiving funds initially intended for Bitcoin ETFs.
Another factor potentially limiting inflows is the absence of staking in spot ETFs, and Bitcoin’s first-mover advantage, which saw significant inflows before ETH ETF approval in May.
Despite these concerns, Citi highlighted that the timing of ETF launches could coincide with a more dovish Federal Reserve, potentially leading to a favorable macroeconomic environment for cryptocurrencies.
See Also: Odds Of Trump Presidency Raised To All-Time High By Crypto Bettors After Assassination Bid
Why It Matters: Ethereum prices have surged 11% to $3,400 over the past week. This spike is driven by market optimism and the imminent ETF launch, with trading expected to commence by July 23. All eight ETF applications are expected to start trading simultaneously.
Despite Ethereum’s imminent ETF launch, some analysts see Solana SOL/USD as better positioned for the future. The rivalry between the two assets could be exacerbated by a potential future Solana ETF.
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