Launch of Ethereum futures ETFs: who’s already in the race?

As the U.S. Securities and Exchange Commission (SEC) delays decisions on spot Bitcoin-ETF applications, several futures-based ETFs linked to the second-largest cryptocurrency have already come to market.

On September 29, the asset manager Bitwise announced the launch of two “revolutionary” futures ETFs — Bitwise Ethereum Strategy ETF (AETH) and Bitwise Bitcoin ETF and Ether Equal Weight Strategy (BTOP). The products will be available on the Chicago Board of Trade starting October 2.

“Ethereum offers broader portfolio diversification than Bitcoin. Some investors view ETH as an alternative, while others see it as traditional growth investments that include both assets,” said Matt Hougan, CEO of the company.

AETH invests in regulated Ethereum futures with a one-month maturity. Custodian is Bank of New York Mellon, and the expense ratio is 0.85% of AUM. The BTOP fund purchases futures on Bitcoin and ETH in equal weight, assets held under similar conditions.

Bitwise warned that both funds do not directly invest in or own cryptocurrencies. The shares themselves are bought and sold at market value.

On September 29, ProShares announced the launch of three Ethereum futures ETFs:

• ProShares Ether Strategy ETF (EETH) — focused exclusively on futures for the second-largest cryptocurrency;
• ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE) — consists of Bitcoin and ETH futures in a 50/50 split;
• ProShares Bitcoin & Ether Market Cap Weight Strategy ETF (BETH) — rebalanced monthly based on their market capitalizations.

The listing will take place on the New York Stock Exchange.

“We believe BETE and BETH are innovative because they give investors the ability to track the price dynamics of the two leading cryptocurrencies on their brokerage accounts via a single transaction with one ticker,” said ProShares CEO Michael Sapir.

In the near term, a futures Ethereum fund from VanEck is expected to launch. The instrument will list on the Chicago Board Options Exchange under the ticker EFUT, though the exact date remains unknown.

The company said it would donate 10% of profits from the new product to Ethereum developers—the Protocol Guild—for 10 years.

Big announcement!

We intend to donate 10% of our $EFUT ETF profits (https://t.co/gr652AkUvv) to @ProtocolGuild for at least 10 years.

Thank you, Ethereum contributors, for nearly a decade of relentless building & ongoing stewardship of this common infrastructure.

Details ?

— VanEck (@vaneck_us) September 29, 2023

“If TradFi benefits from the efforts of core Ethereum participants, it makes sense that we should also credit their work. We urge other asset managers/ETF issuers to consider returning funds in the same manner,” the statement said.

Earlier, the asset managers Invesco and Galaxy Digital filed a joint application with the SEC to launch a spot Ethereum ETF. On September 27, the regulator delayed decisions on similar requests from 21Shares and VanEck until the end of 2023. The agency is also reviewing a document from Hashdex.

On October 2, Grayscale filed to convert its Ethereum Trust (ETHE) into a spot ETH-ETF. According to the statement, the product launched in March 2019 has become the “largest investment vehicle” based on the second-largest cryptocurrency. Assets under management are about $5 bln.

?We’re proud to announce that @NYSE Arca has filed Form 19b-4 with the SEC to convert Grayscale Ethereum Trust $ETHE to a spot #Ethereum ETF. https://t.co/IAHDHTdeqp
?(1/4) https://t.co/IAHDHTdeqp

— Grayscale (@Grayscale) October 2, 2023

In the same note, the company said the SEC has approved their Ethereum futures ETF.

Separately, Valkyrie began buying ETH futures after the SEC approved converting its existing Bitcoin ETF into a 2-for-1 investment instrument.

The instrument with ticker BFT will list on Nasdaq after October 3.

Against the backdrop of news of Ethereum fund launches, Ethereum’s price has moved higher. Over the past week the token rose 9.9% and, at the time of writing, trades around $1,714, according to CoinGecko.

Ethereum’s market capitalisation for the week also rose, by 9.5%, from $189 billion to $207 billion.

Concerns about institutional capital inflows unsettled the bears. On September 29, as the main wave of ETH-ETF news hit, short positions of $9 million were liquidated on the futures market.

The trend worsened — on October 1, short-liquidation volume reached $24 million.

In the wake of the Ethereum fund launches, Ethereum’s price rose. Over the past week the coin climbed 9.9% and, at the time of writing, trades around $1,714, according to CoinGecko.

On September 27, the SEC delayed decisions on several spot Bitcoin ETF applications from ARK Invest and 21Shares until January 2024. The Global X Bitcoin Trust’s deadline was moved to November 2023.

Later the Commission delayed responses to requests from BlackRock, Invesco, Bitwise and Valkyrie.