- The SEC has approved S-1 filings for ETH-ETF, with trading set to commence on July 23.
- Experts do not anticipate a frenzy following the launch, citing risks of increased volatility and a potential Ethereum pullback.
The U.S. Securities and Exchange Commission (SEC) has registered S-1 filings for spot Ethereum-ETFs, with trading of these products beginning on July 23.
Among the approved proposals are those from 21Shares, Bitwise Asset Management, BlackRock, Invesco, Franklin Templeton, Fidelity Investments, and VanEck.
As with BTC-ETF, ETH-ETF issuers have begun adding liquidity to the product.
Previously, the Commission approved applications from ProShares, as well as the launch of a mini-ETF and the conversion of the ETHE trust into an exchange-traded fund by Grayscale.
On May 23, the SEC approved 19b-4 forms for the instrument.
None of the listed applications include staking. Hester Peirce of the SEC assured that “any feature of the products is always open for review.”
Bloomberg analyst Balchunas believes that both staking and the option for redemption in kind, which are currently not included in the proposals, could become possible with a change in the U.S. presidency. Variant’s chief legal officer Jake Chervinsky stated that such innovations are a matter of time, not possibility.
Wintermute forecasts that the spot Ethereum-ETF will attract $3.2–4 billion over the next 12 months, with Ethereum’s price rising by 24%. These conservative estimates are shared by Balchunas and ETF Store president Nate Geraci, writes The Block. The former estimated inflows at $5-8 billion, while the latter predicted a third of the demand for BTC-ETF (~$6 billion).
In comments to ForkLog, OKX’s commercial director Lennix Lai warned of the risks of increased Ethereum volatility following the start of trading. The expert attributed this to the conversion of ETHE into a fund and the potential desire of some investors to lock in profits on trust shares purchased at a premium to ETH’s price.
OKX estimates that in the first week post-launch, spot ETH-ETFs could attract up to $500 million from institutional investors. This is less than what flowed into BTC-ETF following their approval in January, due to uncertainty over a significant shift in the Federal Reserve’s monetary policy. While market participants initially expected three to four rate cuts in 2024, they now hope for only one or two, which dampens risk appetite, specialists added.
According to OKX, similar products with other cryptocurrencies may emerge after ETH-ETF, as well as more complex instruments that consider staking or represent a basket of several underlying assets linked to niches like DeFi and NFT.
TEHNOBIT CEO Alexander Peresichan reminded that the market often follows the adage “buy on rumors, sell on facts.” This pattern proved relevant for the halving and the start of BTC-ETF trading. The expert did not rule out its repetition with Ethereum following the launch of exchange-traded funds based on the asset.
Peresichan emphasized that a less optimistic market environment compared to the beginning of the year increases the likelihood of such a scenario. This is due to the persistently high key rate, which the Federal Reserve has not yet decided to lower due to high inflation, he explained.
“In the medium and long term, the launch of ETH-ETF will support Ethereum’s rate, as it will open direct access to the asset for institutional capital,” noted the top manager.
The TEHNOBIT CEO does not expect a frenzy around the instrument, estimating inflows in the first ten days at $300-700 million (compared to ~$1 billion for BTC-ETF in the same period). Peresichan attributed this assessment to the market situation and macroeconomic climate, as well as the fact that this is not the first spot crypto-ETF.
The expert doubted the emergence of new similar products in the near future due to the not entirely defined regulatory status of digital assets.
“The SEC has a clear position only on Bitcoin, which it has never called a security. Clarity on Ethereum has only recently emerged […]. As for other altcoins, there is still no regulatory certainty. Institutions preferring a more conservative market strategy may view this as additional risks,” concluded the specialist.
Earlier, Standard Chartered’s head of research Geoffrey Kendrick suggested a new phase for exchange-traded funds in 2025. In his view, SOL and XRP are next in line. Geraci predicted the emergence of ETFs based on Bitcoin, Ethereum, and Solana in the “coming months.”
On July 8, Cboe BZX filed a 19b-4 form for 21Shares Core Solana ETF and VanEck Solana Trust. Balchunas believes the SEC could register the instrument by mid-March 2025.