Written by: Li Dan, Zhao Ying
Source: Wall Street Journal
The cryptocurrency market has taken another step forward, with the Ethereum spot ETF gaining popularity on its first day of listing.
On Tuesday, July 23, local time, the Ethereum spot ETF was publicly listed and traded in the United States. On the first day of its debut, investors were enthusiastic, and the media estimated that the total trading volume of the first nine Ethereum ETFs exceeded US$1 billion.
The media pointed out that compared with the $4.6 billion trading volume of the Bitcoin spot ETF on its first day of listing in January this year, the trading volume of the Ethereum ETF is just a drop in the bucket. But this is a strong start for the ETF that debuted in the US market. Several Ethereum ETFs are expected to rank among the top 50 US ETFs in terms of first-day trading volume in history on Tuesday.
Analysts believe that the issuance of this ETF is a positive development for the cryptocurrency market, which will help improve market stability and reduce volatility.
Spot Ethereum ETF is popular
Specifically, Grayscale Ethereum Trust, an Ethereum Trust ETF under Grayscale, had the highest trading volume, close to US$458 million, accounting for nearly half of the total trading volume.
BlackRock’s iShares Ethereum Trust saw $243 million in volume, an amount that is more likely to be inflows than volume in the Grayscale ETF.
Fidelity's Fiedlity Ethereum Trust also had a trading volume of more than $100 million, while the remaining six funds raised less than $100 million, with 21Shares' Ethereum ETF having the least attractive fundraising on its first day.
The total trading volume of these funds reached US$1.077 billion, accounting for about 20% of the daily trading volume of the spot Bitcoin ETF launched in January.
It is worth mentioning that trading volume only represents the scale of transactions and does not reflect the flow of funds bought or sold by investors. It may take at least until Wednesday this week to obtain data on the net inflow or outflow of Ethereum ETF funds.
Drew Walsh, vice president of research and operations at Roundhill Financial, commented that the audiences of Ethereum ETFs and Bitcoin ETFs are similar. They are not native audiences of cryptocurrencies, but people who are new to this asset class and want to hold cryptocurrency exposure.
Crypto ETFs help improve market stability
Some industry commentators are optimistic about the investment prospects brought by the listing of Ethereum ETF in the Ethereum market.
Grzegorz Drozdz, market analyst at investment firm Conotoxia Ltd, said:
While Ethereum ETFs may not attract as much inflows as Bitcoin ETFs, they represent an important step in the development of the cryptocurrency market.
The price of ether, the world's second-largest cryptocurrency after bitcoin, fell on Tuesday, pulling down the price of the new ETF, with ether currently trading flat at $3,469.
Market participants see the launch of the ETF as significant for the industry’s long-standing effort to classify ether as a commodity rather than a security. While the SEC has not explicitly said ether is a commodity, the new product is defined in the filing as a commodity-based trust.
Cristiano Ventricelli, senior digital asset analyst at Moody’s Ratings, wrote in a report on Tuesday:
The listing strengthens the "legitimacy" of cryptocurrencies in the U.S. market, adding that crypto ETFs will help increase market stability and reduce volatility.
At the same time, some analysts pointed out that in May this year, the U.S. SEC approved the exchange-related plan to pave the way for the listing of the Ethereum ETF. That month, industry insiders said that the launch of the Ethereum ETF may cause a surge in market demand, leading to a tight supply of Ethereum. In the case of tight supply, the price of Ethereum may be more sensitive to capital inflows, and the locked Ethereum cannot be used to meet the new demand for ETFs, which will further cause supply tensions and push up the price of Ethereum. Therefore, the listing of the Ethereum ETF may herald a key "turning point" before the price of cryptocurrencies soars.
Last month, Bitwise CTO Matt Hougan predicted that the Ethereum spot ETF will receive $15 billion in net capital flows in the first 18 months of listing. This Monday, the media mentioned that research firm Steno Research predicted that the Ethereum spot ETF may attract $15 billion to $20 billion in capital inflows in its first year, which is roughly the same as the inflows of the Bitcoin spot ETF in just seven months.
According to Wintermute statistics, analysts' current expectations for Ethereum ETF capital inflows within one year after listing range from $4.8 billion to $6.4 billion. Wintermute's own analysts expect inflows to be lower than this expected range, with inflows of $3.2 billion to $4 billion.
Christopher Jensen, head of digital asset research at Franklin Templeton, said that investors may accept Ethereum ETFs faster than Bitcoin ETFs because many people have already had the opportunity to dabble in Bitcoin ETFs, and the total capital flow of Ethereum spot ETFs may reach about 30% of that of spot Bitcoin ETFs.
