The broader market isn’t reflecting Ethereum’s true value, which could be fixed with refined messaging to entice Wall Street investors to snap up spot Ether exchange-traded funds (ETFs), say executives from institutional staking firm Attestant.
Attestant’s chief business officer Steve Berryman and strategic adviser Tim Lowe told Cointelegraph they remain bullish on Ether (ETH) despite the low appetite for the United States ETFs and complaints of “underperformance” in the price action of ETH itself.
But, they’ve set their sights on several crucial developments, including better marketing, diversification, and tokenomics, that could spark renewed appetite for the asset on a longer time horizon.
ETH needs to get ‘mindshare’
Bitcoin (BTC) currently dominates the mindshare of digital assets for institutional investors. With a simple value proposition of being “digital gold” — it hasn’t been hard to sell it to the suits on Wall Street, said Lowe.
However, Lowe believes Ethereum can easily nab some of this mindshare through a mix of refined marketing and a more unified value proposition which will see it naturally accrue value from institutional investors that choose to diversify into the asset over time.
“I think the number one, simple catalyst for Ethereum is diversification. In traditional finance, almost everyone wants to have a more diversified portfolio,” Lowe said. “We know digital assets are becoming an investable asset class for traditional investors, so it’s an easy step to say, okay, we should diversify.”
“How do you diversify? The next step is into ETH.”
But diversification can only come about if Ethereum is made more simple for non-crypto natives to wrap their heads around.
“Is it an app store? Is it a blockchain-based internet, or is it ‘digital oil’?” asked Lowe.
“At the moment Ethereum is only really going to be interesting to people that are interested — a lot of people buying Bitcoin ETFs are just looking at a digital asset that performs very well,” Lowe added.
“But eventually, we’ll see more refined messaging where ETH will permeate its way into the wider consciousness,” he said.
US Ether ETFs have continued to fall short of market expectations after launching in July, with ETF analyst Eric Balchunas correctly predicting a “small potatoes” debut for the funds relative to Bitcoin ETFs.
The nine Ether ETFs have together seen a net outflow of $564 million since launch and on Sept. 10, they broke an eight-trading day streak where the funds saw no net positive inflows.
Ether ETFs have launched to less volume compared to their Bitcoin counterparts. Source: FarSide
Staking would be a big win
Staking is another major selling point for Ethereum on a longer-term horizon says Berryman, which would allow Ether ETF investors to earn about 4% a year by owning ETH through a fund.
Several fund managers, including BlackRock, Fidelity, and Franklin Templeton, tried to get regulatory approval to include staking in their ETFs but were rejected by the SEC.
Berryman said the exclusion of staking was a necessary sacrifice for funds to make at the time but added it would be an ideal scenario for Ethereum to see it introduced in the future.
“It makes a lot of sense to introduce staking at some point. If you’re going to hold Ethereum, then why wouldn’t you also stake it?”
Aside from concerns that staking may regulated under US securities laws, Berryman said one of the biggest challenges for ETF issuers looking to offer staking was issues with liquidity, particularly in the short term.
“With these ETFs, you need to be able to get in and out quickly and there’s not a finite staking period. If there’s a long queue, then it can take a long time,” he said.
Staked ETH can take days to be withdrawn — a problem for issuers who are required to quickly redeem shares for the underlying asset on request.
Ethereum is “harder” than Bitcoin
Even if staking is never an option, the issuance schedule of Ethereum itself is reason enough to gain exposure to ETH, added Lowe.
While many view Bitcoin as a “harder” asset than Ethereum, due to the capped supply of 21 million BTC, Lowe said Ethereum actually boasts a superior economic model for investors who are attracted to scarcity.
Related: 3 reasons why Ethereum price has lagged behind Bitcoin in 2024
“When you pay ETH for gas, you’re actually taking it out of circulation, which Bitcoin doesn’t have,” he said.
“It’s not going to miners to be sold. It’s being destroyed and reducing the circulating supply.”
The continued halving of Bitcoin’s block reward every four years introduces significant sustainability issues in the long term, Lowe said, something that Ethereum’s development model allows it to avoid.
“In terms of pure numbers, there’s less Ethereum issued each year than Bitcoin,” said Lowe, which he said is a far more attractive prospect for value-driven investors in the long haul.
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