Bitcoin’s store-of-value proposition makes its spot ETF more appealing than Ethereum’s, as the latter’s spot ETF does not capture its primary ecosystem utility.
Analysts are predicting that the Securities and Exchange Commission (SEC) may approve spot Bitcoin ETF applications in January 2024, following the approval of Bitcoin Futures ETFs in October 2021 and Ether Futures ETFs in October 2023. Traditional financial institutions, including BlackRock, have applied for spot Ether ETFs, with expectations of approval, possibly after their Bitcoin counterparts, potentially in late 2024 or early 2025.
However, concerns arise regarding the viability of spot Ether ETFs due to the disparity between Ether’s use cases and the product offerings. Unlike Bitcoin, which is widely recognized as a store of value, Ether’s investment thesis revolves around its utility within the Ethereum network, where it serves as “gas” for transactions and is used for staking in a proof-of-stake blockchain.
The challenge lies in marketing spot ETFs for Ether as it doesn’t offer shareholders the ability to participate in the Ethereum network, a key reason investors might seek to acquire Ether. Additionally, Ether’s core value proposition makes it difficult to market ETF products that only provide price exposure, as investors hold Ether for its utility within the Ethereum ecosystem rather than its decentralization or monetary qualities.
Spot Bitcoin ETFs, on the other hand, are seen as a more straightforward investment proposition, appealing to those who view Bitcoin as a store of value. The store-of-value investment thesis makes it easier for traditional financial firms to market spot Bitcoin ETFs to financial advisors and retail investors.
The lackluster launch of the Ether futures ETF in October suggests that a spot Ether ETF may face similarly low demand, as the underlying investment theses for Bitcoin and Ether will determine the success of ETFs issued against these assets. While Bitcoin is often seen as a long-term store of value, Ether’s utility within the Ethereum ecosystem might limit the appeal of a spot Ether ETF.
