The Ethereum spot ETF will be listed on Tuesday, with products from eight companies trading on three exchanges. The launch of the Ethereum spot ETF is expected to drive up the price of Ethereum, but the inflow of funds may not be as high as Bitcoin. Research firms predict that the ETF will attract between $15 billion and $20 billion in fund inflows in the first year. Ethereum does not have the first-mover advantage like Bitcoin, but the scale of the Ethereum ETF is still expected to be significant. Investors can now access over 70% of the liquid crypto asset market through low-cost exchange-traded products
The U.S. Securities and Exchange Commission (SEC) seems to have given the green light for the exchange-traded funds (ETFs) holding the world's second-largest cryptocurrency Ethereum to start trading as early as Tuesday.
The SEC has notified at least two of the eight companies applying to launch the first batch of physical Ethereum ETFs in the United States that their products can start trading on Tuesday.
Products from BlackRock, VanEck, and six other companies will begin trading on Tuesday morning on three different exchanges: the Chicago Board Options Exchange (CBOE), the Nasdaq Exchange, and the New York Stock Exchange, all of which have confirmed they are ready to start trading. Packaging Ethereum into an ETF can make it easier for traditional investors to accept.
The physical Ethereum ETF is being launched about six months after the launch of the physical Bitcoin ETF, which was the most successful debut in the industry's history. According to FactSet data, since its listing in January this year, the physical Bitcoin ETFs, led by iShares Bitcoin Trust (IBIT), have attracted a total of over $16 billion in net fund inflows, driving Bitcoin's price up by over 58% in just two months, hitting a record high.
Some analysts predict that while the launch of physical Ethereum ETFs may drive the price of Ethereum up to $6,500, the inflow of these funds will not be as high as similar funds focusing on Bitcoin. Part of the reason is that Ethereum's total market size is only about one-fourth of Bitcoin's. However, the size of the Ethereum ETF is still expected to be significant compared to the issuance standards of most ETFs.
Research firm Steno Research predicts that the newly launched Ethereum ETF will attract $15 to $20 billion in fund inflows in the first year, roughly equivalent to the fund inflows of the physical Bitcoin ETF in just seven months. A report from the company states that Ethereum lacks the "first-mover advantage" that Bitcoin has and lacks the strong appeal among supporters like Bitcoin's "digital gold" belief.
Matt Hougan, Chief Investment Officer at Bitwise, said: "We are now fully in the era of cryptocurrency ETFs, where investors can access over 70% of the liquid crypto asset market through low-cost exchange-traded products."
He predicts that these ETFs will attract $15 billion in funds in the first year and a half of listing, with many investors holding both Bitcoin and Ethereum funds simultaneously. Hougan said, "If you think investors don't have a specific view and just want to understand what blockchain can do, then their starting point is to get exposure to both Bitcoin and Ethereum."
There are already funds in the market that use Ethereum futures contracts, but these newly approved funds will be the first in the United States to purchase and hold physical Ethereum. Kyle DaCruz, head of VanEck's digital asset division, said, "As the first company to apply for an Ethereum ETF in 2021, we have always believed that investors should have access to Ethereum through a tool they find convenient and familiar." If Bitcoin is digital gold, then Ethereum is an open-source app store, serving as a gateway to thousands of applications utilizing blockchain technology