Despite the initial excitement surrounding the newly launched US spot Ethereum exchange-traded funds (ETFs), analysts predict minimal short-term price impact on Ethereum.

Tepid Market Behavior

Ethereum's market behavior has been tepid since the US Securities and Exchange Commission (SEC) greenlit these investment products. Its price and investor interest have declined noticeably compared to Bitcoin and Solana.

Since the introduction of the ETFs, Ethereum's price has declined to $3,251, an 8% drop. Simultaneously, significant net outflows from Ethereum-related financial products, notably the Grayscale Ethereum Trust (ETHE), indicate a broader disinterest.

Data from SoSoValue reveals that approximately $178.68 million has exited the market in three days, with a staggering $1.16 billion withdrawn from ETHE since the ETFs began trading. The outflows from ETHE are mainly caused by investors migrating away from high-fee products. ETHE charges around ten times more fees than its competitors.

Comparison to Bitcoin ETFs

Market analysts had anticipated that Ethereum's ETFs would replicate the excitement and surge in demand observed with Bitcoin's ETFs.

However, the Ethereum market's response has been lukewarm. "ETH is in limbo. Ethereum failed to scale the L1 while Solana rapidly gained ground. L2 scaling must add value to Ethereum (low ETH burn, fragmented liquidity, worse UX). Airdrop farming isn't enticing anymore (low rewards). Even ETFs couldn't ignite FOMO for ETH," DeFi analyst Ignas expressed disappointment.

Staking Yield and Regulatory Hurdles

According to SoSoValue, ETFs' ineligibility for staking may be a primary factor contributing to this indifference. Direct Ethereum holders can earn a staking yield of 3%- 5%.

Conversely, ETF investors are restricted from this benefit due to regulatory constraints and face a direct disadvantage.

This staking yield is crucial to Ethereum's value proposition, serving as a 'risk-free' rate in the crypto domain. The absence of this yield in the ETF model likely deters potential investors, who prefer more traditional, direct holdings or alternative crypto assets that offer better returns or more favorable investment structures.

Knowledge Gap and Market Impact

Moreover, the public's understanding of Ethereum's fundamentals could be better than that of Bitcoin, which is often called 'digital gold.' This knowledge gap also dampens enthusiasm around Ethereum's ETFs, as potential investors remain cautious and favor more familiar investments.

"Ethereum, as the most extensive essential public chain, has a relatively complex mining mechanism, and various forces influence its development in the ecosystem.

Most importantly, as an investment target, its supply quantity involves dynamic calculations, making it difficult for ordinary investors to understand intuitively," SoSoValue said.

Additionally, analysts from SoSoValue noted that Ethereum ETFs may not significantly alter buying or selling pressures in the short term. While the Bitcoin Spot ETF witnessed substantial daily net inflows that directly impacted its market price, Ethereum's equivalent currently lacks such market-moving potential.

Long-Term Implications

However, the introduction of Ethereum ETFs might still play a crucial role in the broader acceptance and integration of crypto into mainstream financial markets.

As the most significant public blockchain platform, Ethereum's transition into regulated financial products could pave the way for similar movements across other digital assets.