JP Morgan anticipates “negative market reaction” to Ethereum ETFs

The largest American multinational bank, JP Morgan, put cold cloths on the market launch of exchange-traded funds (ETFs) spot ether (ETH)the native cryptocurrency of Ethereum.

This Thursday, May 30, the financial giant’s team of analysts, led by Nikolaos Panigirtzoglou, issued a report titled “Flows and liquidity”, in which mention is made of these financial instruments. In the text, it stands out:

“Initial market reaction to the launch of Ethereum spot ETFs is likely to be negative. “We believe demand will be a fraction of what was seen for bitcoin (BTC) spot exchange-traded funds.”

JP Morgan analyst team.

In the aforementioned report, specialists argued that this is because “BTC had the advantage of being the first to move, potentially saturating the overall demand for these digital currency-based assets, in response to spot ETF approvals.”

In that sense, they indicated that the BTC halving acted as an additional catalyst to increase the demand for these financial instruments. Furthermore, according to the report, another reason that discourages investment may be that the issuing companies eliminated staking from their ETF presentations, at the request of the SEC. This robs these ETFs of their most differentiating feature: the possibility of delivering dividends to their investors.

However, JP Morgan says ETH spot exchange-traded funds could attract up to $3 billion in net inflows for the remainder of 2024.

Compared to BTC it seems little. Since its launch on January 10, 2024, the ETFs of the cryptocurrency created by Satoshi Nakamoto have recorded net inflows of $13.73 billion.

As Criptonoticias already reported, the United States Securities and Exchange Commission (SEC) approved the companies’ ether ETFs: VanEck, Franklin Templeton, Ark21Shares, Hashdex, Grayscale, Invesco Galaxy, BlackRock and Fidelity.

However, for the ETFs to be listed on the stock exchange, the agency still needs to “give a thumbs up” to the S-1 applications, a document in which the issuing firms detail their risk profile, finances and values.

As of this writing, VanEck and BlackRock have submitted this information to the SEC.

In this regard, Eric Balchunas, a specialist at the financial analysis information firm Bloomberg, said through his X account that the presentation of these documents is “a good sign” for Ethereum ETFs to hit the market at the end of June. .

“We’ll probably see the rest arrive soon. Then probably one more round of fine-tuning feedback from staff. A late June release is a legitimate possibility, although I’m keeping my estimated date around July 4.”

Eric Balchunas, Bloomberg analyst.

For his part, Bloomberg specialist James Seyffart explained that these updates in the S-1 indicate that “issuers and the SEC are working towards the launch of Ethereum exchange-traded funds (ETFs).