Potential institutional interest in an Ethereum ETF collides with waning whale participation, affecting the cryptocurrency’s path forward.

  • Volatility Shares joins other enthusiastic companies in the ETF race.

  • Institutional interest in ETH increased, but whale interest in Ethereum decreased.

As all eyes are on Bitcoin [BTC] when a potential ETF receives SEC approval, Ethereum [ETH] is seen positioning itself to benefit from this emerging investment avenue.

Ethereum has emerged as a serious contender alongside Bitcoin in the increasingly crowded ETF application space. Notably, volatility stocks have recently made inroads into the Ethereum ETF space.

More players join

Eric Balchunas, a well-known ETF analyst at Bloomberg, revealed that Volatility Shares plans to launch an Ethereum futures ETF on October 12. This strategic move was announced in a filing with the SEC on July 28.

The proposed ETF, called the Ethereum Strategy ETF (ticker: ETHU), would invest in cash-settled Ethereum futures contracts, thus avoiding direct investment in the cryptocurrency itself.

  • VolatilityShares announced their intention to list their Ethereum futures ETF on October 12th (which would be a day or two earlier than other exchanges if 75 days are adhered to)..they did the same with $BITX pic.twitter.com/hhFtk32f4X

  • — Eric Balchunas (@EricBalchunas) August 15, 2023

While this may seem like a unique approach, Volatility Shares previously made a splash in July when it launched the first 2x Bitcoin-pegged ETF (BITX). This foray solidified the company’s position in the cryptocurrency-related ETF space.

However, Volatility Stocks is far from alone in the Ethereum ETF race. Other notable financial firms, including Bitwise, VanEck, Roubhill, ProShares, and Grayscale, have also filed applications with the SEC.

The surge in institutional interest in Ethereum could have a significant impact on its trajectory. The launch of an Ethereum-focused ETF could broaden its appeal to a wider range of investors, potentially driving demand and boosting its value.

The whale swam away

Despite institutional hopes, an interesting contrast emerges. Data from Glassnode shows that whales’ interest in Ethereum has declined, with the number of addresses holding more than 10,000 ETH hitting a two-year low of 1,095.

At press time, Ethereum is trading at $1,830.8, having moved relatively sideways over the past week. The market value to realized value (MVRV) ratio, a key indicator of address profitability, is largely biased towards negative territory. This suggests that most holders have less incentive to sell.

During the same period, Ethereum’s long-short ratio surged, indicating a growth in the number of long-term holders. This could reduce impulsive selling by short-term holders, thereby promoting price stability.