The U.S. Securities and Exchange Commission (SEC) appears to have given the green light for an exchange-traded fund (ETF) holding ethereum, the world’s second-largest cryptocurrency, with trading set to begin as early as Tuesday.
The SEC has notified at least two of the eight companies that have applied to launch the first U.S. spot Ethereum ETFs that their products can begin trading on Tuesday.
Products from BlackRock, VanEck and six other companies will begin trading on three different exchanges Tuesday morning: the Chicago Board Options Exchange (CBOE), Nasdaq and the New York Stock Exchange, which all confirmed they are ready to start trading. Wrapping Ethereum into an ETF could make it more accessible to traditional investors.
The launch of the spot Ethereum ETF comes about six months after the launch of the spot Bitcoin ETF, which was the most successful debut in the industry's history. According to FactSet data, since its listing in January this year, led by the iShares Bitcoin Trust (IBIT), spot Bitcoin ETFs have attracted a total of more than $16 billion in net inflows, pushing the price of Bitcoin to soar by more than 58% in just two months, setting a record high.
Some analysts predict that while the launch of a spot Ethereum ETF could push Ethereum prices to $6,500, these funds will not see as much inflow as similar funds focused on Bitcoin. This is partly because Ethereum's total market size is only about a quarter of Bitcoin's. However, compared to most ETF issuance standards, the size of the Ethereum ETF is expected to be large.
Research firm Steno Research predicts that the newly launched Ethereum ETF will have inflows of $15 billion to $20 billion in the first year, which is roughly the same as the inflows of the spot Bitcoin ETF in just seven months. A report from the company said that Ethereum does not have the "first-mover advantage" that Bitcoin has, nor does it have the strong response among many supporters like Bitcoin's belief in "digital gold".
“We have now fully entered the era of cryptocurrency ETFs, with investors now having access to more than 70% of the liquid crypto asset market through low-cost exchange-traded products,” said Matt Hougan, chief investment officer at Bitwise.
He predicts that these ETFs will attract $15 billion in the first year and a half of listing, with many investors holding both Bitcoin and Ethereum funds. "If you think that investors don't have a particular viewpoint and just want to understand what blockchain can do, then their starting point is to have exposure to both Bitcoin and Ethereum," Hougan said.
There are already some funds on the market that use Ethereum futures contracts, but these newly approved funds will be the first in the U.S. to buy and hold spot Ethereum. Kyle DaCruz, head of VanEck's digital assets department, said: "As the first company to apply for an Ethereum ETF in 2021, we have always believed that investors should be exposed to Ethereum through a tool they find convenient and familiar. If Bitcoin is digital gold, then Ethereum is the open source application store and the gateway to thousands of applications that utilize blockchain technology."
Article forwarded from: Jinshi Data
