Spot Ethereum ETFs have had a rough start since launching in July, experiencing $476 million in net outflows in August and a 30% drop in Ethereum’s price. This starkly contrasts with the January launch of spot Bitcoin ETFs, which saw $5.4 billion in inflows and a Bitcoin price surge past $50,000.
However, JP Morgan analysts caution against directly comparing the performance of these two crypto ETFs. They highlight several factors contributing to the disparity, including Bitcoin’s established “store of value” reputation and the fact that spot Ethereum ETFs don’t offer staking rewards, thus not reflecting Ethereum’s full value.
The analysts acknowledge differences in market capitalizations, use cases, and opportunity costs between the two assets, stating that comparing their ETF flows is “somewhat like comparing apples to oranges.”
Yet, there are some similarities. When comparing the value of assets under management (AUM) in ETFs relative to each coin’s market capitalization, both perform more in line than initially apparent. In their first full trading month, spot Bitcoin ETFs’ AUM represented 3% of Bitcoin’s market cap, while Ethereum ETFs totaled 2.3%.
Experts attribute part of the Ethereum ETF outflows to factors like the ETHE’s high expense ratio and traders capitalizing on the disappearance of its once-sizable discount. In recent days, trading volumes for spot Bitcoin ETFs have also been six times higher than their Ethereum counterparts.
While the Ethereum ETF market faces challenges, JP Morgan analysts suggest that direct comparisons to Bitcoin’s debut may not be entirely accurate due to fundamental differences between the two cryptocurrencies and their respective ecosystems.
