People have always seen Bitcoin as digital gold, possessing the same hedging value as gold. Can Ethereum, which has smart contracts, be considered digital silver? Bitfinex’s analysis 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 The Block, Bitfinex’s derivatives product manager, Jag Kooner, 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 parallel, as when new gold ETFs were introduced, they attracted significant investment, thereby influencing 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 the SPDR Gold Trust (GLD) debuted on the New York Stock Exchange, fundamentally changing gold trading by providing investors with a convenient and liquid way to invest in gold without the need for physical possession. When the first silver ETF was introduced in 2006, investors increased their positions and transferred funds to it, especially due to the increasing demand for silver in industrial applications.
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 is also studying silver ETFs and gold ETFs, viewing Ethereum as playing a role similar to silver.
While people have always seen Bitcoin as digital gold, with the same hedging value as gold, comparing Ethereum to silver also makes sense because both silver and gold are precious metals that have been considered currencies in ancient times. However, silver is also an important industrial metal, with excellent electrical and thermal conductivity, making it widely used in industrial production such as electronics, photosensitive materials, pharmaceuticals, and chemicals.
In contrast to Bitcoin’s payment applications, ETH has more utility and embedded applications, supporting the argument for Ethereum being likened to digital silver.
However, Balchunas estimates that the performance of an Ethereum spot ETF would be considered quite good if it reached about 10% of the performance of a Bitcoin spot ETF.