New York, NY – Investors in the United States can now gain exposure to Ethereum through newly approved exchange-traded funds. The Securities and Exchange Commission greenlit these products in May, and they officially start trading on the market today.
Following the successful launch of Bitcoin ETFs earlier this year, which allowed investors to track the price of the cryptocurrency through shares on traditional stock exchanges, attention now turns to Ethereum. Will the Ethereum ETFs experience the same rush of investment as their Bitcoin counterparts, potentially leading to a surge in ETH’s price? Market experts caution that expectations should be tempered as things may take some time to settle.
While demand for Bitcoin exposure was high before the launch of Bitcoin ETFs, the same level of enthusiasm may not be seen for Ethereum. Greg Magadini, derivatives director at Amberdata, noted lackluster demand for Ethereum futures leading up to the ETF launch, suggesting that inflows into Ethereum ETFs might disappoint compared to Bitcoin.
James Butterfill, head of research at CoinShares, highlighted a potential downside with the involvement of Grayscale, a top crypto asset manager. Butterfill warned that investors may rush to cash out of the main Grayscale ETF as soon as it launches, which could mirror the downward pressure seen on Bitcoin’s price when Grayscale converted its Bitcoin trust into an ETF earlier this year.
Despite potential initial outflows, approval of the Ethereum ETFs is seen as positive for the digital asset sector overall. Billy Luedtke, CEO of Intuition, believes that a mini trust associated with the ETF could enhance investor attractiveness and lead to increased inflows into Ethereum.
Looking ahead, market expectations are mixed, with Patrick Felder, founder and CIO of Prismatic Capital, predicting flows of around 15-25% of those seen with the Bitcoin ETF. If inflows exceed these expectations, significant price movements in Ethereum could occur as market expectations are recalibrated.
In conclusion, the introduction of Ethereum exchange-traded funds to the U.S. market marks a milestone for cryptocurrency investors. While the potential for significant price movement exists, caution and patience are advised as market dynamics play out in the coming weeks.