Spot Ethereum ETFs

In May, the SEC approved eight spot Ethereum ETFs, potentially launching in July. These ETFs, unlike Bitcoin’s, offer staking rewards. Projections estimate ETH ETFs could see $1.4–$4.5 billion in inflows and $700 million to $2.4 billion in trading volume within six months. Ethereum’s scalability upgrades enhance its investment appeal.

Jul 04, 2024
Eth Etfs

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Key Takeaways

  • The US Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs in early 2024. This approval has strengthened the legitimacy of cryptocurrency assets as an emerging asset class.
    • US spot Bitcoin ETFs accumulated $27.2 billion in AUM within a week after launching in January 2024. Total net inflow and cumulative volume amounted to $14.4 billion and $309 billion, respectively, as of 25 June.
    • Over 600 firms disclosed billions in US spot Bitcoin ETFs in Q1 2024.

  • In May 2024, the SEC approved eight spot Ethereum ETFs, which could launch in July 2024. But they still require S-1 form approvals for market entry.
    • Though current futures-based ETH ETPs offer ways to invest in ETH, spot ETFs are often preferred due to their direct exposure to the underlying assets, reduced complexity, lower risk profile, and broader market acceptance.
    • With the comparative significance in market size, liquidity, and fee structure, US spot ETH ETFs are believed to drive much larger traction than HK spot ETH ETFs.
  • Following the news of the SEC’s approval of spot Ether ETFs, existing Ether exchange-traded products (ETPs) like Grayscale Ethereum Trust (ETHE) saw significant rallies. The discount between the trading price of ETHE and its underlying NAV reached its narrowest point since 2021.

  • Ethereum distinguishes itself from Bitcoin in a few ways, which also impact its ETFs. 
    • Bitcoin is often described as ‘digital gold’ and primarily seen as a store of value. Ethereum is positioned as a ‘global computer’ with more functional capabilities, enabling smart contracts and decentralised applications (dapps).
    • Spot Ether ETFs could offer dividend potential from staking rewards, which is not a feature of Bitcoin ETFs. But new Ethereum ETFs have removed staking features to align with SEC regulations.
  • Projections on some key metrics for the potential ETH ETFs:
    • Price Performance: The approval of S-1s is expected to positively impact Ether’s price, potentially reaching $6,000 level within 60 days post launch assuming ETH’s performance follows BTC’s performance after the spot BTC ETFs launch.
  • Inflow: Community estimates that ETH ETFs could see around 10%–30% of the total inflows in BTC ETFs, meaning $1.4–$4.5 billion in the first six months. In comparison, BTC ETFs saw $14.4 billion in inflows during the same period.

  • Trading Volume: ETH ETFs’ trading volume could reach between $700 million to $2.4 billion after five months. In comparison, BTC ETFs saw $7 billion in trading volume during the same period.

  • The SEC’s approval of spot Ethereum ETFs is expected to significantly impact the Ethereum market. Ethereum’s upgrades, such as the Dencun upgrade, have enhanced its scalability and efficiency, making it more attractive for investment.

Read the full report: Spot Ethereum ETFs

Authors Research and Insights team

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Ethereum / Dogecoin / Dapp / Tokens