Ethereum, the second largest cryptocurrency after Bitcoin, has also welcomed a spot ETF. Is the feast about to begin again?
A spot Ethereum ETF officially opened for trading in the U.S. on Tuesday, potentially bringing the world’s second-largest cryptocurrency into the investment tools of many professional investors and advisors, marking another step in the growing integration of digital assets into mainstream finance.
After the spot Ethereum ETF began trading, the price of Ethereum fell slightly but quickly recovered most of its losses.
Haseeb Qureshi, managing partner of Dragonfly, pointed out that the opening trading volume of the spot Ethereum ETF was very strong, but the price of Ethereum has not changed significantly. It can be speculated that this is because Grayscale's ETHE is mainly selling, which will offset a lot of capital inflows on the first day.
Ethereum is the native cryptocurrency on the Ethereum blockchain. Compared to Bitcoin, which is often seen as digital gold, investing in Ethereum is seen more as a bet on the growth of blockchain and cryptocurrencies more broadly.
Jay Jacobs of BlackRock said, “Ethereum’s appeal lies in its decentralized nature and its potential to drive digital transformation in finance and other industries.”
According to FactSet data, the spot Bitcoin ETF has attracted about $17 billion in net inflows since its launch in January, making it the most successful ETF launch in history. The market expects that the scale of the spot Ethereum ETF may be smaller than the spot Bitcoin ETF because many investors may not be familiar with Ethereum.
“Ethereum is still a little bit confusing for both individual and institutional investors,” said Sam Callahan, senior bitcoin analyst at Swan.
It is worth noting that the spot Ethereum ETF does not yet support staking, a process that can provide additional returns for crypto-native investors.
Many funds set to launch this week have temporarily waived fees to attract customers, with management fees ranging from 0.15% to 2.50%.
The cheapest and most expensive spot Ethereum ETFs both come from Grayscale, which is effectively converting its multi-billion dollar private Ethereum fund into two ETFs at different prices.
Ethereum prices have risen more than 50% so far this year, but have been basically flat over the past month. Unlike the market enthusiasm before the launch of the spot Bitcoin ETF in January, the cryptocurrency does not seem to have the same degree of demand growth. Joel Kruger, a strategist at LMAX Group, said:
“Overall, given that the market has pulled back, there is still room for the overall market sentiment to surprise, and the overall risk balance is favorable.”
