Market anticipation for spot Ethereum ETFs, akin to the swift cash influx witnessed with their Bitcoin counterparts, may face a sobering reality check, warns a team of analysts from JPMorgan.

In their comprehensive "Flows & Liquidity" report released Thursday, JPMorgan's analysts, spearheaded by Nikolaos Panigirtzoglou, provided insight into the potential initial market response to spot Ethereum ETFs. Within the extensive 25-page report, Ethereum-related discussions occupied a minute portion, highlighting cautious sentiments.

According to the analysts, the launch of spot Ether ETFs is unlikely to mirror the fervent demand experienced by spot Bitcoin ETFs, such as those offered by BlackRock and Fidelity, which swiftly amassed $10 billion in assets under management shortly after launch.

Outlined within the report were several factors contributing to this divergence in market sentiment. Firstly, Bitcoin's "first mover advantage" absorbed much of the initial demand for crypto assets following the approval of spot Bitcoin ETFs. Additionally, Bitcoin's recent halving event acted as a catalyst for heightened demand, a factor absent in Ethereum's PoS consensus mechanism.

Moreover, the removal of staking from ETF filings rendered Ethereum ETFs less appealing compared to platforms offering staking yield. The analysts also emphasized Bitcoin's role in competing with gold within portfolio allocations, a position Ethereum, primarily designed for applications, does not fulfill.

Further, Ethereum's lower liquidity, compared to Bitcoin, presents a deterrent for hedge and quant funds seeking to allocate assets. As a result, JPMorgan anticipates a modest $1 billion to $3 billion in net inflows for Ethereum ETFs in 2024, assuming they launch before year-end.

The analysts speculated that net inflows could triple if staking capabilities are introduced to ETFs, pending legislative confirmation of Ethereum as a commodity by Congress. For context, as of May 30, total assets under management for spot Bitcoin ETFs stood at $59 billion, significantly higher than the anticipated inflows for Ethereum.

Moreover, echoing concerns from Grayscale's Ethereum product, JPMorgan cautioned about potential outflows post-launch. They predict around $1 billion exiting the Grayscale Ethereum Trust as speculative investors capitalize on profit-taking opportunities following the ETF launch, potentially exerting downward pressure on Ethereum prices.

In conclusion, while Ethereum ETFs hold promise, JPMorgan's analysis suggests a tempered market response compared to the fervor witnessed with Bitcoin ETFs.