Let’s first have a quick look at Bitcoin ETF and its performance.
- Bitcoin ETFs launched on October 18, 2021, with the ProShares Bitcoin Strategy ETF.
- Saw $15.1Bn in net inflows from Jan 11 to June 15, 2024.
- Takeaways: Institutionalized Bitcoin, inflows exceeded expectations, driven by retail demand and growing institutional interest.
- The SEC's approval process paved the way for broader market adoption.
Introduction to Ethereum ETFs
- The SEC approved 19b-4 filings on May 23, 2024, expected to allow trading in July 2024.
- With 9 issuers vying for 10 @ethereum spot ETFs in the US, the market is gearing up for Ethereum ETF.
- Grayscale is seeking to convert its ETHE {Grayscale Ethereum Trust} trust to an ETP {Exchange Traded Products}.
Ethereum ETF Flow Projections
- Ether spot ETF inflows could be 33% the size of US spot bitcoin ETF inflows with a range of 20% to 50% of size in dollars.
- Ethereum's price is more sensitive to ETH inflows than BTC due to significant portions of ETH total supply locked in staking, bridges and smart contracts, and a lower amount on centralized exchanges.
Positive Impact of ETH ETFs
- Expanded accessibility across wealth segments, making Ethereum investments available to a broader audience.
- Greater acceptance through formal recognition by regulators and trusted financial services brands.
- Potential for significant inflows to boost Ethereum's market position and overall adoption.
ETH vs. BTC Price Sensitivity
- Ethereum is supposed to be potentially more sensitive to inflows due to its unique supply dynamics.
- Currently, a greater proportion of BTC supply is held on exchanges compared to ETH (11.7% vs. 10.3%), suggesting tighter ETH supply and greater price sensitivity
- Post-Merge, Ethereum has experienced net negative issuance, adding to its price sensitivity.
Final Thoughts
The potential launch of spot Ethereum ETFs is expected to have a largely positive impact on the market adoption of Ethereum and the broader crypto ecosystem for two primary reasons:
- Expanded accessibility across various wealth segments.
- Greater acceptance through formal recognition by regulators and trusted financial services brands.
We value your Thoughts
Comment below and let us know what do you think the launch of Ethereum ETFs will impact?
As always, this is not financial advice.
The crypto market is highly volatile and subject to rapid changes. Do your own research before making investment decisions.
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