Ether is the digital silver Ethereum spot ETF could attract 10 of Bitcoin ETF capital
People have always regarded Bitcoin as digital gold, possessing hedging value similar to gold. Can Ethereum, which has smart contracts, be regarded as digital silver? Bitfinex’s analysis using examples of gold and silver ETFs suggests that an Ethereum spot ETF has the potential to capture 10-20% of the funds currently flowing into Bitcoin ETFs.
According to a report by The Block, Jag Kooner, the derivatives product manager at Bitfinex, stated that an Ethereum spot exchange-traded fund (ETF) could capture 10-20% of the funds currently flowing into Bitcoin ETFs.
Bitfinex analysts provided a historical example illustrating how fund managers transfer funds between multiple related ETFs to balance risks. The launch of gold ETFs provides a historical similarity because when new gold ETFs are introduced, they attract significant investments, affecting the flow of existing financial products related to gold. Similarly, the launch of an Ethereum ETF could lead fund managers to reallocate funds to balance their exposure to Bitcoin and Ethereum.
The first gold spot ETF was launched in November 2004, when SPDR Gold Trust (GLD) made its debut on the New York Stock Exchange, fundamentally changing gold trading by providing investors with a convenient and liquid way to invest in gold without physical ownership. When the first silver ETF was launched in 2006, investors increased their positions and transferred funds into them, especially as demand for silver in industrial applications continued to rise.
Therefore, it is speculated that if an Ethereum spot ETF is officially launched, it could capture 10-20% of the funds currently flowing into Bitcoin ETFs.
Bloomberg ETF analyst Eric Balchunas also studied silver ETFs and gold ETFs, viewing Ethereum as playing a role similar to silver.
While people have always regarded Bitcoin as digital gold, possessing hedging value similar to gold. Comparing Ethereum to silver also makes sense because both silver and gold are precious metals that were historically considered currencies. However, silver is also an important industrial metal, ranking high in terms of electrical and thermal conductivity among metals, so silver has a wide range of applications in industrial production such as electronics, photosensitive materials, pharmaceuticals, and chemicals.
In contrast to Bitcoin’s payment applications, ETH has more practical and embedded applications, supporting the important reason for Ethereum being likened to digital silver.
However, Balchunas estimates that the performance of an Ethereum spot ETF, with a 10% return compared to a Bitcoin spot ETF, would already be quite good.
