A recent event has sparked a lot of excitement in the global financial landscape and beyond, and that’s the well-awaited approval of spot ether exchange-traded funds (ETFs) from the US Securities and Exchange Commission. In an unexpected turn of events, the regulator greenlit the development of the Ethereum-based grantor trusts by some of the largest investment firms out there on May 23, 2024, months after a similarly startling decision was taken regarding Bitcoin. Now, spot ETH and BTC ETFs have burst onto the scene, but the former will take a little longer to trade than its counterpart.
For newbies, spot Bitcoin ETFs and spot Ethereum ETFs do pretty much the same thing: offering investors exposure to the underlying assets without obliging them to hold the cryptocurrency themselves, thus reducing some risks. The difference, hence, lies in the cryptocurrency held by the trust.
However, just like Bitcoin electrified the financial realm in the US and beyond, Ethereum’s milestone didn’t fall short of expectations. Investors have been all ears anticipating the SEC’s final decision, and current statistics attest to this heightened enthusiasm. The number of individuals either getting engaged with Ethereum or habitually checking its price has increased, as indicated by Binance data, and this trend shows no signs of slowing down. The second-largest cryptocurrency has shot up almost 30% since the news of the SEC’s approval broke, and now bets are being placed on how abundant the outflows infused into the new exchange-traded products will be, as well as the way the development will affect prices. So, what can we expect from Ethereum’s ETF activity and prices from now on?
The issue of issuers’ item listing times
All the discussions these days seem to revolve around the possible time when Ethereum ETFs will finally get launched and become tradeable for investors. In light of the unceasing debates, it’s safe to say that the most reliable sources of information that can give us hints are the statements of those at the highest levels when they’re available. In an unexpected move and attempt to clear up the waters, SEC Chair Gary Gensler made a point to emphasize that it’s not the American regulator that will establish the launch date of the already-frenzied ETFs.
The debut’s date and approval speed hinge on ETF issuers’ efficiency in addressing the SEC comments, conducting the necessary modifications to align with the regulator’s demands, and obtaining approval for their submitted S-1 registration statements.
While the SEC’s Chair, who was assigned to this function by President Joseph R. Biden three years ago, believes this move is the “sustainable path forward,” it’s clear that the feedback received by the issuers will only ensure the executive’s statement will reflect the reality of investors months, or even years ahead.
Notably, BTC ETFs triggered massive flows into Bitcoin
After numerous adjustments made by the Bitcoin ETFs’ issuing firms and months of back-and-forth interactions between the entities, the new exchange-traded products finally received the green light on Jan 10, 2024. As was expected, the regulator’s late decision, which had generated a lot of noise in the market, wasn’t just received with open arms but also with rising investment appetite, leading to colossal inflows of capital into Bitcoin from the issuing companies as well as other whales.
To date, over $10BN inflows were attracted by the assets within less than a month from their release. The surprising growth registered over the subsequent three months boosted the asset’s price further, propelling it to a new ATH of $73K and edging towards the $74K level, before it ultimately began retracting. Giants Fidelity and BlackRock swiftly hit the parade with inflows worth more than $1BN within the first days, being followed by Franklin Templeton, Fidelity, and other best-sellers. By then and well after, all sorts of bets were placed on the inflows the new investment tools could attract, all within the realm of billions.
Now, ETH ETFs could follow in the precursor’s footsteps
The news of the recently approved ETH ETFs getting the OK from the SEC came sooner for investors than the preamble that marked Bitcoin. Whether Ethereum ETFs will have a harder or easier time to break into the market and into investors’ portfolios is, however, debatable since these are broadly predicted to launch by the end of the summer.
Investment-wise, the regulator’s approval for the Bitcoin-based trusts preceded millions of dollars flowing into Bitcoin from whales, and the scenario is expected to repeat for Ethereum ETFs, too. If you’re up to speed with the events and trends unfolding in the crypto sphere, you’ve likely grasped that Ethereum is foretold to see bright days. The open interest of Ethereum futures on the famous Chicago Mercantile Exchange (CME) spiked, similarly to how it behaved in Bitcoin’s ETF context. A famous crypto pundit, Bobby Banzai, has tried their hand at the future inflows into Ethereum ETFs when these investments will be available for the open public to trade. The CME data and estimations associated with international ETF values disclose that Ethereum’s worth could be around 19% compared to Bitcoin.
The reputable researcher shared their opinion that ETH ETF inflows could amount to $569MN, considering that Bitcoin’s flows took 137 trading days to peak at $13.6BN on May 27 of this year. According to the connoisseur, Bitcoin ETF’s popularity sparked so much enthusiasm among investors regarding the approval of the Ethereum-based products that they began urging them forward.
More experts envision Ethereum shooting up
Big names like VanEck, Hashdex, and Bitwise launched their own running commercials to help the progress of Bitcoin ETFs. For instance, BlackRock launched an ad campaign to have spot BTC ETF advertisements projected on buildings’ surfaces. At the same time, VanEck tried to push the new products out the door with advertisements touting Bitcoin ETFs designed for the small screen.
If Ethereum benefits from a similar marketing campaign, the predictor’s forecasted inflows worth $569MN directed into its ETFs could materialize. Other experts back up such scenarios. For instance, Eric Balchunas, an analyst at Bloomberg, emphasized the possibility of a fifth of the BTC ETF market relocating into ETH ETFs.
Now, how do you feel about Ethereum’s future after ETFs start trading? Do you deem the former or the latter more lucrative, were you to start investing in one of them?
