Ether futures-based exchange-traded funds (ETFs) have recently made their debut in the United States, with ProShares, VanEck, and Bitwise being the frontrunners in launching these innovative products. While this development may contribute to increased institutional adoption of cryptocurrencies, analysts caution that it may not necessarily have a positive impact on crypto prices in the medium term.
The Journey of Ether Futures ETFs
The introduction of ether futures-based ETFs follows a two-year gap since the launch of the first bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO), in 2021. ProShares, VanEck, and Bitwise have now joined forces to develop ETFs that focus on ether (ETHUSD).
Market Reactions and Outlook
On Monday, major cryptocurrencies experienced gains, with bitcoin showing a 2.9% increase over the past 24 hours and ether experiencing a modest 0.1% rise, according to CoinDesk data.
Among the newly-launched ETFs, the ProShares Ether Strategy ETF (EETH) traded 2.2% lower, settling at approximately $40.66. The VanEck Ethereum Strategy ETF (EFUT) witnessed a decline of 7.1%, reaching around $16.91. Similarly, the Bitwise Ethereum Strategy ETF (AETH) experienced a 2.5% drop, settling at $25.25.
The Ripple Effect
Simeon Hyman, global investment strategist at ProShares, acknowledges the efficacy of the crypto futures approach based on their experience with BITO. With this in mind, it was a logical step for them to launch an ether futures ETF.
According to Hyman, “If we got it for Bitcoin, let’s do it for ether because they are the most dominant cryptocurrencies.”
While the inception of ether futures-based ETFs may expand institutional participation in the crypto market, it remains to be seen how this will impact crypto prices in the coming months.
As the world continues to witness the evolution of the crypto landscape, these ETFs mark another milestone in the journey towards wider acceptance and integration of digital assets into mainstream financial systems.
The Significance of Ether-Futures ETFs in the Crypto Market
The recent launch of ether-futures ETFs has garnered attention in the crypto market, signaling positive developments for institutional acceptance of digital assets. Greg Moritz, the COO and co-founder of Alt Tab Capital, a crypto hedge fund, expressed his optimism about this development, stating that it is likely to pave the way for the approval of future spot ETFs. However, the U.S. Securities and Exchange Commission (SEC) has yet to approve any ETFs that directly invest in bitcoin or ether, citing concerns about market manipulation.
A key event that has further intensified the debate surrounding ETFs is the federal appeals court’s order in August for the SEC to reconsider its rejection of Grayscale’s proposal to convert its Bitcoin Trust product into an ETF. Many analysts believe that this decision could potentially lead to the eventual approval of bitcoin ETFs. As a result, several asset managers, including BlackRock, Fidelity, WisdomTree, VanEck, and Invesco, have already filed applications for spot bitcoin ETFs as of June.
Market analysts at K33 Research emphasize that the launch of ether-futures ETFs could expedite the increase in buying pressure on ether, surpassing earlier expectations. However, analysts at QCP Capital hold contrasting views. They observe that following the launch of BITO, bitcoin reached its all-time high of $68,990 in November 2021 but subsequently experienced a decline. Despite a 70% increase in value this year, bitcoin remains nearly 60% below its peak.
According to the analysts at QCP Capital, a futures-only ETF may potentially divert demand away from the spot market and into a synthetic market, thereby impacting the spot price unfavorably.
In summary, while the debut of ether-futures ETFs signifies positive progress for institutional acceptance of digital assets, its potential impact on market dynamics remains a subject of debate among experts.
