Ethereum, the second-largest blockchain network in the world, is anticipated to be the center of attention for the upcoming spot crypto exchange-traded fund (ETF). However, there are concerns that Ethereum may struggle with its sales pitch. Its highly technical roadmap could be challenging for Wall Street to comprehend, potentially dampening the demand for spot Ether (ETH) ETFs.
Markus Thielen, the head of research at 10x Research, believes that the best way to attract investors is to avoid using technical jargon. Thielen, along with several commentators, shares their ideas on how Ethereum could be presented.
One suggestion is to position Ethereum as “the network empowering the future of finance.” This would make it easier for Wall Street investors to understand. Ethereum is already home to the majority of the world’s largest decentralized finance protocols, tokenized real-world assets, and stablecoins. However, Thielen points out that Ethereum has lost many users and has been slow in implementing recent network upgrades, which could impact this narrative.
Another approach is to pitch Ethereum as a platform that decentralizes various services, powering not just finance but also social networks, artificial intelligence, and more. Henrik Andersson, the chief investment officer at investment management firm Apollo Crypto, suggests this broader perspective.
Andersson also proposes a simpler pitch, highlighting Ether as a cryptocurrency with more potential for growth compared to Bitcoin. He believes that others would see Ethereum as a smaller but faster-growing crypto asset. Currently, Ether’s market cap is $453 billion, while Bitcoin’s market cap is approximately three times larger at $1.34 trillion.
Despite the technical complexity of Ethereum’s roadmap, Andersson is confident that Wall Street investors won’t be deterred. The relative price of Ether to Bitcoin has been steadily declining, making it more challenging to convince investors to buy Ether ETFs when there are already Bitcoin investment products available, according to CK Zheng, the investment chief at cryptocurrency hedge fund ZX Squared Capital.
There are also other factors that could hinder the performance of spot Ether ETFs, such as the ongoing investigation into the Ethereum Foundation by the Securities and Exchange Commission and the rise of Solana as an Ethereum competitor, Zheng points out.
However, some of the biggest names on Wall Street have already started exploring Ethereum’s use cases with success. BlackRock, one of the approved spot Ether ETF issuers, tokenized its BlackRock USD Institutional Digital Liquidity Fund using Ethereum in March, accumulating $470 million in assets. BlackRock’s CEO, Larry Fink, believes that eventually, every stock and bond will be tokenized on a blockchain. If Fink’s prediction comes true, Ethereum could benefit since it already accounts for 71.9% of all tokenized financial assets on-chain, according to analysts at 21Shares.
The Securities and Exchange Commission approved 19b-4 applications from various institutions to issue spot Ether ETFs. Once the SEC grants their Form S-1 filings, these ETFs will be available for trading. Bloomberg ETF analyst James Seyffart predicts that the ETFs will attract 20% of the flows that spot Bitcoin ETFs have seen, while Eric Balchunas estimates a more conservative range of 10% to 15%.
In conclusion, Ethereum’s sales pitch for the upcoming spot Ether ETF must strike the right balance between technical details and simplicity. Presenting Ethereum as the network empowering the future of finance or as a platform decentralizing various services could be effective. Additionally, highlighting Ether’s potential for growth compared to Bitcoin and showcasing successful use cases from major financial institutions could attract Wall Street investors. However, challenges such as the complex roadmap and competition from other cryptocurrencies must be addressed to ensure the success of spot Ether ETFs.