Ethereum ETF Launch Expected to Attract $5.4 Billion in Inflows Within First Six Months

Ahead of the launch of spot Ethereum ETH/USD ETFs in the U.S., Citi forecasts that inflows could reach up to $5.4 billion within the first six months. This projection, as reported by CoinDesk, represents around 30%-35% of the levels observed with spot Bitcoin ETFs. Analysts at Citi, led by Alex Saunders, emphasized that Ethereum offers diversification benefits in the long term due to its various use-cases, although these advantages may not be fully recognized in the current market landscape.

The approval of spot ETFs for Ethereum marks a significant development, with trading set to begin next Tuesday following the nod from the Securities and Exchange Commission (SEC). Citi analysts highlighted the potential for investors to allocate funds between Bitcoin and Ethereum, potentially channeling resources initially intended for Bitcoin ETFs towards Ethereum. However, challenges such as the absence of staking in spot ETFs and Bitcoin’s head start in attracting investments before Ethereum ETF approval in May could hinder inflows.

Despite these challenges, Citi noted that the timing of ETF launches could coincide with a more accommodative stance from the Federal Reserve, creating a favorable macroeconomic backdrop for cryptocurrencies. The price of Ethereum has surged by 11% to $3,400 in the past week, partly driven by market optimism surrounding the ETF launch. Some analysts, however, believe that Solana SOL/USD may be better positioned for future growth, intensifying the rivalry between Ethereum and Solana in the crypto space.