"Ethereum ETFs Coming in Hot" - Swiss Private Bank

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"Ethereum ETFs coming in hot," headlines a new note from Swiss investment and private bank Julius Baer.

However, don't be surprised if the new spot ETFs struggle in the medium term. This is according to Manuel Villegas Franceschi, Next Generation Research analyst at Julius Baer.

His latest research briefing follows the approval by the US Securities and Exchange Commission of spot ethereum exchange traded funds (ETFs), which represents another landmark for cryptocurrency advocates and investors following the debut of bitcoin ETFs earlier this year.

"Fees are low, custodians are the common names, and so are the exchanges; staking is not allowed, as expected," says Franceschi.

Nine ether ETFs, introduced by names such as BlackRock and Fidelity, gained approval from the SEC on Monday afternoon. Trading began on Tuesday morning.

Despite the developments, the price of ETH has fallen this week, suggesting it remains linked to the broader fortunes of Bitcoin and that the positive developments out of the SEC were expected by investors.

Francheschi says there are other reasons to consider:

"Overall, the incapacity to stake will weigh down on the success of the products and so will the fact that Bitcoin and Ethereum serve very different roles within a portfolio context. Ethereum’s risk-adjusted returns are less attractive than Bitcoin’s, especially when considering maximum drawdowns and volatility over a less controlled and often inflationary supply schedule."

"Investors should not be surprised if Ethereum spot ETFs struggle to gather assets in the medium term, just as the futures-based Ethereum ETFs that were approved last year in the United States," he adds.