5 things to know about Ethereum ETF

When 

The SEC approved filings for eight spot Ethereum ETFs in mid-May. However, the regulator still needs to give the green light to their S-1 filings before these ETFs can be launched and start trading. We know this date is soon, and a recent surge of amended S-1 filings means that July 2 has been circled as a possible launch date.  

What 

Spot Ether ETFs will directly hold Ether, the cryptocurrency that supports the Ethereum blockchain. Like spot Bitcoin ETFs, spot Ether ETFs will be set up as grantor trusts, which means that investors will own a share of the Ether held by the trust. When approved, names such as BlackRock, Fidelity, ARK, and Grayscale, among others, will offer the ETF. 

Demand outlook 

The predicted potential demand for Ether ETFs varies. Using the current demand for Ether vs. Bitcoin in the futures market, Ethereum ETFs could grab around 20% of the Bitcoin ETF market share. Other estimates vary widely, with JP Morgan forecasting $1 billion to $3 billion in net inflows in H2 2024 and K33 Research projecting demand in the region of $4 billion in the first five months. However, unlike with Bitcoin, holding Ether directly could have a performance edge over spot ETH ETFs for those willing to engage in staking. This could impact demand. 

Price action so far 

Since the rumblings of SEC spot ETH approval on May 20th, the ETH price rallied from $3050 to a peak of $3800 a week later. This was still short of the $4093 high reached in March and below the 2021 all-time high. The price has since given up most of those gains, falling to a low of $3300 amid a broad market correction owing to macro trends. 

5 things to know about Ethereum ETF - ethusd 1024x406

New ATHs? 

The approval of the spot ETH ETF will expose Ethereum to institutional traders, opening it to a new market of investors in the same way that BTC ETFs did. It has the potential to change the investing landscape surrounding Ether. Bitcoin rallied to an ATH two months after the SEC spot Bitcoin ETF approval. We are not expecting the same reaction from ETH, although this development is expected to support the ETH price in the long term. 

Author

Kathryn Davies
Kathryn is a well-established market analyst with a focus on fundamental and technical analysis covering a wide range of markets, including crypto, forex, indices, and commodities. She looks to provide concise explanations of what is happening in eco...
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