Introduction of Ethereum ETFs
The Chicago Board Options Exchange (CBOE) announced that five spot Ethereum exchange-traded funds (ETFs) will begin trading on July 23, pending regulatory effectiveness. This development follows the United States Securities and Exchange Commission’s (SEC) approval of rule changes on May 23, allowing the listing of spot Ether ETFs. However, the launch depends on the final approval of each fund issuer’s S-1 registration statements by the regulator.
List of Ethereum ETFs Set to Launch
The five spot Ether ETFs scheduled to commence trading are:
- 21Shares Core Ethereum ETF
- Fidelity Ethereum Fund
- Invesco Galaxy Ethereum ETF
- VanEck Ethereum ETF
- Franklin Ethereum ETF
To gain an early market advantage, many ETF issuers plan to temporarily waive or discount fees. This strategy aims to capture market share once trading begins. Analysts predict that these Ether ETFs could attract billions of dollars in net inflows in the months following the launch. The increasing demand from institutional investors seeking to include Ether in their ETFs might lead to a supply crunch. The Ethereum Exchange Reserve, which tracks the amount of available Ether for purchase on cryptocurrency exchanges, is currently at multi-year lows.
Market Predictions and Analyst Insights
A recent report by Kaiko highlighted Ether’s 1% market depth. It suggested that lower liquidity could lead to heightened price volatility, potentially causing Ether to outperform Bitcoin in percentage gains. Institutional analyst Tom Dunleavy believes that inflows into Ethereum ETFs could reach $10 billion this year, with capital flows of up to $1 billion per month. He is optimistic about the price impact and anticipates new all-time highs for Ether by early Q4.
Update: Nate’s instincts were correct. The SEC has responded to issuers, asking them to return final S-1s on Wednesday, including fees. They then requested effectiveness on Monday after close for a Tuesday, July 23 launch, provided no unforeseen last-minute issues arise.
Similarly, Matt Hougan, Chief Investment Officer of Bitwise, noted that Ethereum stakers are less inclined to sell their assets compared to Bitcoin holders. He pointed out that 28% of Ether’s supply is already sequestered. Increased withdrawals from exchanges to cold storage indicate that Ether holders expect future price appreciation.
The Political Influence on Ethereum ETF Approval
Bloomberg ETF analyst James Seyffart believes that the approval of spot Ethereum ETFs was influenced by political decisions rather than purely financial considerations. In a recent interview, Seyffart suggested that the political climate, including actions by the Biden administration and responses from the crypto community, played a significant role in the approval process.
Seyffart also noted that beyond Bitcoin and Ethereum, the approval of other crypto ETFs, such as Solana, is unlikely without significant regulatory changes. He emphasized that a regulated market is needed to monitor these assets for fraud and manipulation.
In contrast, crypto investor and trader Brian Kelly has suggested that Solana could potentially become the next cryptocurrency to have a spot ETF in the United States. In a recent episode of CNBC’s ‘Fast Money’, Kelly, who is also the founder and CEO of the BKCM Digital Asset Fund, posed the question, “The trade now is, who’s next?” He then suggested, “You’ve got to think about Solana as probably the next one. Bitcoin, Ethereum, and Solana are probably the big three for this cycle.”
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