JPMorgan's latest research report suggests that the forthcoming Ether spot exchange-traded funds (ETFs) will see significantly lower demand compared to their Bitcoin counterparts. According to the financial giant, these Ether ETFs could attract up to $3 billion in net inflows by the end of this year. Should staking be allowed, this figure could potentially double to $6 billion.

The bank attributes the disparity in demand to several factors. Firstly, Bitcoin's first-mover advantage has likely saturated much of the market's appetite for cryptocurrency ETFs following the approval of spot Bitcoin ETFs earlier this year. Analysts led by Nikolaos Panigirtzoglou noted that Bitcoin's established presence and broader appeal as a portfolio asset, often compared to gold, provide it with a distinct edge over Ether.

Additionally, the report highlights that Ether ETFs are nearing availability in the U.S. market following the Securities and Exchange Commission's (SEC) approval of key regulatory filings last week. However, these ETFs cannot begin trading until their S-1 filings receive final approval from the SEC. In contrast, Bitcoin ETFs have been trading since January, giving them a head start.

Another factor dampening demand for Ether ETFs is the absence of a significant upcoming event like Bitcoin's reward halving, scheduled for April, which is expected to boost demand for Bitcoin ETFs. Furthermore, the lack of staking options for approved Ether ETFs makes them less attractive compared to other platforms that offer staking yields, diminishing their appeal to investors seeking additional returns.

The report also points out that Ether's position as an application token differs from Bitcoin's role, limiting its appeal to a narrower investor base. Bitcoin's ability to compete with gold for portfolio allocations grants it a broader investor interest.

Liquidity and assets under management (AUM) also play a crucial role in the attractiveness of ETFs to institutional investors. Ether's spot ETFs are anticipated to suffer from lower liquidity and smaller AUM compared to Bitcoin ETFs, making them less appealing to larger investors.

JPMorgan predicts a potentially negative initial market reaction to the launch of Ether spot ETFs. Speculative investors holding the Grayscale Ethereum Trust (ETHE) in hopes of it converting to an ETF might sell off their holdings to take profits, leading to an estimated $1 billion in outflows and exerting downward pressure on Ether prices.

Overall, while Ether spot ETFs are poised to enter the market, JPMorgan's analysis suggests they will not match the demand levels seen by Bitcoin ETFs, due to a combination of market dynamics, regulatory timing, and differing investor perceptions and opportunities.