The cryptocurrency market is abuzz in anticipation of the launch of Ethereum ETFs. But algorithmic trading firm Wintermute suggests that demand may not be as strong as some analysts predict.

The anticipated launch of Ethereum ETFs, six months after the successful launch of spot Bitcoin ETFs, has generated significant interest. Spot Bitcoin ETFs raised an impressive $13.8 billion in their first 100 trading days.

Despite the excitement generated by the launch of Ethereum ETFs on July 23, market experts are divided on their potential performance.

“Analysts have mixed views on Ethereum ETFs, with most estimates putting one-year annual flows in the range of $4.8-$6.4 billion,” a new report by Wintermute said. However, the firm’s own analysis suggests a more conservative outlook.

“In our view, ETFs will likely see lower demand than expected, closer to $3.2 billion to $4 billion,” the report said. With a “baseline expectation” that Ethereum ETFs will see 15% to 20% of the inflow observed for Bitcoin ETFs, Wintermute predicts a price increase of 18% to 24%.

This rate is lower than some analysts’ predictions, and one analyst recently predicted a 50% increase in the ETH price to $5,000 following the launch of Ethereum ETFs.

The report attributes this less optimistic forecast to two key factors. The first is “the lack of a staking mechanism, which reduces the attractiveness of Ethereum as an ETF vehicle.” The inability to stake Ethereum within these ETFs may make them less attractive to investors seeking returns that could otherwise be drawn directly into the potential returns offered by Ethereum assets.

Second, the report cites “the lack of a common narrative to attract investors” as a potential obstacle for Ethereum ETFs. Unlike Bitcoin, which has successfully capitalized on the “digital gold” narrative, Ethereum’s more complex ecosystem and diverse applications can make it difficult to present a unified investment thesis to potential ETF buyers.

However, Wintermute noted that Ethereum’s flexibility may still appeal to some. “Within the ecosystem, ETH operates not only as a digital currency, but also as a robust platform for decentralized applications (dApps) and smart contracts,” the report said, adding: “This dual functionality is driven by an interest in technological innovations and various applications of blockchain technology.” It has the potential to attract investors.”

*This is not investment advice.