Ethereum is like ‘Amazon in the 1990s’ — 21 Shares
“Just as Amazon evolved beyond books to redefine entire industries, Ethereum may surprise us with revolutionary use cases that we can’t fully envision today,” a senior executive at 21Shares stated. According to a research researcher at crypto asset manager 21Shares, Wall Street investors are still mostly clueless of Ethereum’s potential, just like Amazon was in the early 1990s before becoming a $2 trillion digital juggernaut.
Spot Ether ETH $2,456.83 exchange-traded funds debuted in July, but have received relatively low inflows compared to spot Bitcoin BTC $68,672 ETFs. According to Leena ElDeeb, a Research Analyst at 21Shares, major inflows into ETH ETFs will occur only once Ethereum’s potential is acknowledged.
It’s “complex, akin to Amazon in the 1990s — promising vast potential but less straightforward in its use cases,” Eldeeb told CNN. While Amazon began as an online bookshop, “few could have predicted that it would transform into a global e-commerce and cloud computing giant, reshaping how we shop and use digital services,” said Federico Brokate, vice president and head of 21Shares’ US business unit.
Similarly, Ethereum began in 2015 as a platform for basic smart contracts and now supports over $140 billion in decentralised finance applications. “Just as Amazon evolved beyond books to redefine entire industries, Ethereum may also surprise us with revolutionary use cases that we can’t fully envision today.”
While Ethereum’s $320 billion market capitalisation is only 6.25% of Amazon’s $2 trillion valuation, Brokate observes that Ethereum had an advantage over Amazon in the 1990s due to the large pool of talent trying to make the network functional.
“By the end of the 1990s, Amazon employed approximately 7,600 workers. According to Brokate, the Ethereum network has over 200,000 active developers, including software engineers, researchers, and protocol designers, who contribute to its evolution. In comparison, Amazon employs over 1.5 million people worldwide, which could be a model for the Ethereum ecosystem to follow.
While Solana and other layer-1 competitors have challenged Ethereum, it remains the dominant player in decentralised exchanges, borrowing and lending, stablecoins, and real-world asset markets.
BlackRock, the world’s largest asset management organisation, has tokenised more than $533 million in money market funds using Ethereum. On November 1, the Union Bank of Switzerland launched a tokenised fund.
PayPal and Visa are also working on Ethereum.
However, “only a few investors understand Ethereum’s potential,” and many have chosen to “remain on the sidelines” with spot Ether ETFs for the time being, Brokate stated.
Short-term investors remain “cautious” and will be less likely to participate in spot Ether ETFs until there is “greater clarity” regarding Ethereum’s potential and use cases, ElDeeb added.
“[However,] we remain optimistic that as the market matures and Ethereum’s diverse applications grow, investor sentiment and adoption will follow a similar path of sustained growth.”
Inflows into spot Ether ETFs were 9% of spot Bitcoin ETFs over the first 90 days, excluding Greyscale outflows, according to Katalin Tischhauser, Head of Research at Sygnum Bank.
This was mainly expected given the short marketing period, investors still “digesting” spot Bitcoin ETFs, and the US securities regulator’s refusal to allow staking, Tischhauser told Cointelegraph.
However, Tischhauser believes the scenario will be quite “different” in 12 months when investors will have had more time to analyse Ethereum’s bull argument.
As a result, she is unconcerned by the number of spot Ether ETF issuers that have continuously reported “0” flows in recent months.
“It would be way too soon to talk about delisting, traditional investors need time.” 21Shares is one of eight US spot Ether ETF providers, and it has received $21.9 million in net inflows.
The lack of institutional flows could be attributable to Ethereum’s layer-2 scaling approach, which is reducing revenue from the Ethereum main net, according to Tischhauser.
According to CK Zheng, chief investment officer of crypto hedge fund ZX Squared Capital, Ethereum’s dropping revenues may not sit well with many Wall Street investors who use cash flow analysis to determine valuation. Despite Amazon’s quarterly losses in the 1990s, Brokate is unconcerned about Ethereum’s current sales woes because its layer-2 scaling model onboards millions of new customers at cheap cost.
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