Bitstamp Exec: Ethereum ETFs Would Have Thrived if Launched in January

Current Market Landscape

Zagotta noted that the performance of crypto assets has shifted to behave more like traditional risk assets. He remarked:

“Crypto is behaving like any other risk asset right now, which is a testament to the maturity of this market versus a year ago or two years ago.”

Bitcoin (BTC) ETFs launched on January 10, 2024, and have attracted impressive net inflows of $17.5 billion over eight months, according to CoinGlass data. In contrast, Ether (ETH) ETFs, which began trading in July, have faced challenges, experiencing over $600 million in net outflows within just two months.

Challenges Facing Ether ETFs

Zagotta attributes the underperformance of Ether ETFs to a “burdened moment” in the markets, saying:

“In this moment, people are waiting. I think they’re in the wait-and-see mode because of the uncertainty in the election, the regulatory environment in the US, and other sociopolitical factors.”

Data from Farside Investors reveals that across the 38 trading days of Ether ETFs, less than a third ended with positive net inflows. This decline is largely due to ongoing losses from Grayscale’s Ethereum Trust and underwhelming performance across other ETFs.

Increased Competition for Ethereum

According to Zagotta, Ethereum faces heightened competition from alternative protocols gaining traction:

• Solana
• Other emerging blockchain protocols

He explained:

“There’s no question that this is the most competitive it’s been for Ethereum ever.”

Looking Ahead: Potential for Ether

Despite the current challenges, Zagotta expressed cautious optimism about the fourth quarter, anticipating a moment of clarity in the market:

“I do personally believe that we’re heading toward a moment of clarity. Election, interest rates, hopefully, regulatory momentum in the US.”

He sees the fourth quarter as an “active market” and is hopeful for some “real price action,” especially in the altcoin space. However, former Wall Street trader Nick Forster indicated that Ether may struggle to reach new all-time highs by the end of 2024, as it lacks a compelling narrative to attract investors away from tech stocks.

Conclusion

While Ether ETFs are currently facing significant challenges compared to their Bitcoin counterparts, there is potential for recovery as market conditions evolve. As factors like regulatory clarity and macroeconomic trends unfold, both Ether and the altcoin market may experience renewed interest and activity.