Ethereum’s ETF Launch: A Muted Response
On October 2, a total of nine Ethereum futures ETFs (Exchange-Traded Funds) were introduced to the market. However, the initial trading volumes for these ETFs have been relatively subdued. Bloomberg ETF analyst, Eric Balchunas, highlighted that by midday, less than $2 million in volume had been traded, describing the volume as “pretty meh.” This response is in stark contrast to the first Bitcoin futures ETF, BITO, which saw a whopping $200 million in trading within the first 15 minutes of its launch.
Comparing Ethereum and Bitcoin ETFs
The ProShares Bitcoin Strategy ETF, which recorded the impressive BITO volume, was launched during a bull market peak in October 2021. This context might explain the disparity in initial enthusiasm between the two cryptocurrency ETFs. MV Capital CIO, Tom Dunleavy, expressed his skepticism about the bullish sentiment surrounding Ethereum’s ETFs. He emphasized the significance of spot buying facilitated by a SPOT ETF, as these funds require seeding (purchasing a set amount ahead of market demand). Dunleavy pointed out that if ten or twelve spot ETFs are approved for Bitcoin or Ethereum, this could translate to $500 million to $1 billion in spot buying, which would have a substantial impact on price action. In contrast, futures ETFs don’t cater to this latent demand.
The Future of Spot ETFs: A Glimmer of Hope
Despite the lukewarm reception of Ethereum’s futures ETFs, there’s a palpable optimism regarding the approval of spot Bitcoin ETFs. ETF Store President, Nate Geraci, mentioned that issuers are increasingly confident about the SEC’s green light for spot Bitcoin ETFs. Bitwise CIO, Matt Hougan, anticipates the launch of a spot bitcoin ETF within the current year. Similarly, VanEck CEO, Jan van Eck, predicts the emergence of a spot product in early 2024.
Personal Commentary
From my point of view, the subdued response to Ethereum’s futures ETFs is not entirely surprising. The comparison with Bitcoin’s ETF launch, which occurred during a bull market, is a testament to the influence of market conditions on new product receptions. As I see it, the real game-changer will be the approval and launch of spot ETFs. The potential for significant spot buying, as highlighted by Dunleavy, could usher in a new era of price action for cryptocurrencies. On the flip side, it’s essential to remain cautious and not exaggerate the significance of these developments. The cryptocurrency market is notoriously volatile, and while spot ETFs promise potential growth, they also come with inherent risks.
