The analyst believes that fund managers will now be seeking to reallocate resources.
Jag Kooner, head of derivatives at Bitfinex, has made a bold claim regarding the long-awaited arrival of spot Ether ETFs in the United States. According to him, the relatively new funds might capture a significant portion of the investment flows currently directed toward Bitcoin ETFs. Although he sees the Ether ETFs capturing between 10-20% of the investments, Kooner believes that a lot would depend on a key factor: staking.
Ether ETFs to Attract Investors, Here’s Why
Kooner explains that his prediction will rely on whether the US Securities and Exchange Commission (SEC) allows the ETFs to offer staking rewards. Staking, as it were, is a process where investors earn interest on their holdings. Interestingly, this is a major advantage that Ethereum possesses over Bitcoin and could significantly impact investor decisions.
Furthermore, Kooner also used historical examples to illustrate how Ether ETFs could eat deep into the investment flows. He cited when gold ETFs were newly introduced, recalling how they immediately attracted significant investment, which in turn impacted existing gold-related financial products.
In the same manner, the analyst believes that fund managers will now be seeking to reallocate resources. This is so that they can balance their exposure between Bitcoin and Ethereum to achieve a diversified portfolio.
Gold: A Prime Example
As most investors believe, diversifying one’s portfolio is a way to spread risk and maximize possible returns. That is what happened after the launch of the SPDR Gold Trust (GLD) on the New York Stock Exchange in 2004, the Bitfinex analyst noted. The gold ETF changed the way that gold was being traded by offering a convenient way for investors to gain exposure without physically holding the metal.
Similarly, the introduction of silver ETFs like the iShares Silver Trust in 2006 saw investors add the new positions to their portfolios, particularly due to the growing demand for silver in industries at the time.
Looking at these antecedents, one would understand why Kooner believes that Ether ETFs may lead to a similar trend. That is especially true considering Ethereum’s diverse use cases which extends beyond just its characteristic as a store of value.
While the future of Ether ETF staking remains a doubt, their arrival presents an exciting opportunity for investors. Particularly, who would prefer not to keep all their crypto market eggs in one basket. So, whether it’s a 20% bite out of Bitcoin’s share or a silver lining for Ethereum’s intricate value, one thing is clear: the launch of spot Ether ETFs is a major development within the crypto industry.
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