ETH exchange-traded funds won’t see the same first-day inflow as spot Bitcoin ETFs because the asset’s use cases are harder to assess, an industry official has warned.
Bitcoin exchange-traded funds saw inflows of $655.2 million on the opening day of trading on January 11, beating industry expectations at the time.
Although Bitcoin provides a consistent store of value use case, the metrics used to evaluate investment use cases based on Ethereum’s technology are much less clear, said Stephen Richardson, managing director of financial markets. at Fireblocks, at Cointelegraph.
“What’s missing is a broad consensus that effectively assesses the utility or usage rate of the Ethereum blockchain network.”
“We need to first establish the right metrics and value drivers so that we can assess the adoption or use of technology and then derive value from it,” added Richardson.
As a result, “we likely won’t see the same levels of day one inflows with Ether ETFs as we would with Bitcoin ETFs.”
Bitwise’s BITB product saw the highest number of inflows on the first day of the Bitcoin ETF launch at $237.9 million, followed by Fidelity’s FBTC ($227 million) and BlackRock’s IBIT ($111 million). .7 million), according to BitMEX research data.
When discussing how one should value Ethereum, Richardson suggested looking at total value locked, a metric that can actually be used to value Ethereum and the second blockchain above it. However, Richardson hinted that he would like to see more.
VanEck, one of the applicants for a recently approved spot ETF, suggested that trading volume and the number of users and validators could be used to gauge adoption and usage of Ethereum.
When asked for his most powerful tip for immediately convincing potential investors to buy Ethereum ETFs, Richardson said Ethereum is “the best bet” for dominating the digital native space and connecting more retail investors and institutional on the chain.
“Ethereum’s value is intrinsically tied to the use cases it’s built on, so investors are betting on the use of the software itself.”
Last week, Markus Thelen, head of research at 10x Research, suggested that Ethereum could be presented as “a network to enable the future of finance.”
However, Thelen said the revenue generated by Ethereum is “tiny” compared to its $455 billion market capitalization, which does not mean it is “a viable investment that generates cash flow enough “.
Thelen added that Ethereum signature yields are also lower than US Treasury yields.
about: SEC decision means ETH and “many” other tokens are not securities
On May 23, the SEC approved 19b-4 applications from VanEck, BlackRock, Fidelity, Grayscale, Bitwise, Franklin Templeton, ARK 21Shares and Invesco Galaxy to issue ether spot ETFs.
Those who are approved must wait for the SEC to approve their Form S-1 filings for the ETFs to begin trading.
If that happens, Bloomberg ETF analysts Eric Balchunas and James Seyfart expect ETFs to account for 10% to 20% of inflows seen in spot Bitcoin ETFs.
According to Farside Investors, Bitcoin ETFs have generated $13.8 billion in net inflows since the products launched approximately four and a half months ago.
Getting 15% of that would still mean that Ethereum ETFs would have a combined value of $2.07 billion over the same period, which is still impressive by industry standards.
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