TLDR
- Spot Ethereum ETFs have received final approval from the SEC to begin trading on Tuesday, July 23, 2024.
- Several major firms including BlackRock, Fidelity, and VanEck will offer Ethereum ETFs.
- Ethereum ETFs are expected to see less demand than Bitcoin ETFs, potentially attracting 10-15% of the assets Bitcoin ETFs received.
- The approved Ethereum ETFs will not include staking components initially.
- Ethereum’s market cap is about one-third of Bitcoin’s, which may impact ETF inflows.
On Tuesday, July 23, 2024, spot Ethereum exchange-traded funds (ETFs) will begin trading in the United States, marking a significant milestone for cryptocurrency investors.
The U.S. Securities and Exchange Commission (SEC) gave final approval to several major financial firms to offer these products, which will allow investors to gain exposure to Ethereum’s ether (ETH) through traditional brokerage accounts.
Companies receiving approval include industry giants such as BlackRock, Fidelity, VanEck, and others. This move comes just months after the SEC approved spot Bitcoin ETFs in January 2024, which have since attracted billions of dollars in investments.
Ethereum is the second-largest cryptocurrency by market value, with a capitalization of around $417 billion as of July 22, 2024. This is roughly one-third the size of Bitcoin’s $1.3 trillion market cap. The smaller size of the Ethereum market is expected to impact the demand for Ethereum ETFs.
Analysts predict that Ethereum ETFs will likely see less inflow than their Bitcoin counterparts. While Bitcoin ETFs saw $13.8 billion of inflows in their first 100 days of trading, estimates for Ethereum ETFs range from $4.8 billion to $6.4 billion over the same period.
ETH ETFs have arrived.
Today, the SEC approved 9 spot ETH ETF applications. Their much celebrated arrival marks another important milestone for crypto in expanding access to and diversifying our cryptoeconomy.
Here’s why 🧵 pic.twitter.com/o6KfgGlUDn
— Coinbase 🛡️ (@coinbase) July 22, 2024
Some experts suggest Ethereum ETFs might attract about 10-15% of the assets that Bitcoin products received.
The approval process for Ethereum ETFs was unexpected and swift. After a period of limited engagement, the SEC suddenly changed its stance in May 2024, approving key filings that paved the way for these products.
This quick turnaround surprised many in the industry, as there had been concerns about regulatory hurdles.
One notable aspect of the approved Ethereum ETFs is that they will not include staking components initially. Staking, a process where investors lock up their ether to help secure the Ethereum network and earn rewards, was removed from the ETF proposals due to regulatory concerns. Currently, staking ether generates a return of about 3.2%.
The launch of Ethereum ETFs is seen as another step in the mainstream adoption of cryptocurrencies. These products provide a familiar and regulated way for traditional investors to gain exposure to ether without directly owning or managing the cryptocurrency.
However, some wealth managers and advisers who allocated funds to Bitcoin ETFs earlier this year may have already reached their desired crypto allocation. This could potentially limit initial enthusiasm for Ethereum ETFs.
The price of ether has been relatively stable in the lead-up to the ETF launch, trading at around $3,484 on July 22, 2024. Many analysts believe that the approval of Ethereum ETFs has already been priced into the market.
As trading begins, all eyes will be on the performance and adoption of these new investment products. While they may not match the record-breaking launch of Bitcoin ETFs, Ethereum ETFs represent another significant development in the growing intersection of traditional finance and the world of cryptocurrencies.
