Ethereum exchange-traded funds (ETFs) will finally be available for trading in the U.S. starting tomorrow. This comes after the Securities and Exchange Commission (SEC) approved the products in May and authorized them for trading today. Similar to the success of Bitcoin ETFs, these funds allow investors to buy shares that track the price of Ethereum, providing exposure to the cryptocurrency in a traditional stock exchange setting.
However, market experts caution that the launch of Ethereum ETFs may not immediately replicate the frenzy seen with Bitcoin ETFs. Greg Magadini, derivatives director at blockchain data provider Amberdata, suggests that the demand for Ethereum futures has been lackluster leading up to the launch. In contrast, before the introduction of Bitcoin ETFs, traders were eager for exposure to the asset, resulting in a buzzing derivatives market.
Additionally, James Butterfill, head of research at CoinShares, points out the potential downside of Grayscale’s involvement. The top crypto asset manager plans to launch two products: a main ETF and a mini one. The conversion of Grayscale’s Bitcoin trust into an ETF in January led to investors cashing out, placing downward pressure on the asset’s price. Similar outflows could be expected with the Ethereum ETF conversion.
Despite these concerns, the approval of Ethereum ETFs is viewed as a positive development for the digital asset sector as a whole. Billy Luedtke, CEO and founder of Intuition, highlights the potential of the mini trust to attract investors with its more favorable fee structure and tax benefits. He anticipates substantial inflows into Ethereum as a result.
Patrick Felder, Prismatic Capital founder and CIO, expects the market to see flows of around 15-25% of what was observed with Bitcoin ETFs. If inflows surpass this range, it could lead to a significant increase in the price of Ethereum as market expectations reset.
Overall, while the launch of Ethereum ETFs is highly anticipated, experts believe it may take some time for the market to settle and for significant inflows to occur.