Bernstein: Compared to Bitcoin, the demand for Ethereum spot ETFs may be lower

Brokerage firm Bernstein pointed out in a research report released on Monday that once the Ethereum spot ETF is approved for trading, its demand source may be similar to the Bitcoin ETF, but on a smaller scale. Analysts Gautam Chhugani and Mahika Sapra emphasized in the report that due to the lack of Ethereum staking function, it is expected that there will not be too much conversion volume for Ethereum spot ETF. However, they expect base trades will gradually attract buyers, thereby maintaining healthy liquidity in the ETF market. Base trade strategy involves buying spot ETFs and selling futures contracts simultaneously, waiting for price convergence. The report also noted that as a major tokenization platform, Ethereum is establishing strong use cases for stablecoin payments and tokenization of traditional asset funds.

Bernstein believes that Ethereum and other digital assets need more comprehensive regulatory systems and expects an improved market narrative after US elections with increased chances of Republican victory and Trump's current support for cryptocurrencies. Despite recent pullbacks in cryptocurrency markets, the report emphasizes "the structural adoption cycle remains intact."

Wall Street giant JPMorgan reported last month that demand for spot Ethereum ETF could be far lower than Bitcoin ETF because Bitcoin has first-mover advantage as world's largest cryptocurrency which might have already satisfied overall market demand for crypto exchange-traded index funds.