By Jack Inabinet
Compiled by: BitpushNews Mary Liu
After a difficult, tedious and lengthy approval process, the spot Ethereum ETF is finally listed on a traditional stock exchange!
For years, the crypto community has been eagerly awaiting the launch of ETF products, expecting that their arrival will provide direct economic benefits to global asset management giants, thereby promoting Ethereum. If unprecedented amounts of funds flow into Ethereum, mainstream adoption of on-chain activities will also follow.
Today, letâs discuss Ethereumâs most watched metric in the post-ETF era: the future direction of its price.
Looking ahead
According to Yahoo Finance data compiled by The Block Pro Research, the Ethereum ETF had a cumulative trading volume of more than $1.019 billion on its first day of listing on U.S. exchanges.
While the performance record of spot ETFs is still limited, many expect the product to be bullish for ETH, just as the BTC ETF did.
The spot BTC ETF is one of the hottest financial products this year, attracting $18.6 billion in fund conversions from Grayscale GBTC and accumulating an additional $17 billion in assets under management.
An intuitive data tells us the success of spot BTC ETFs: BlackRockâs IBIT alone has seen more inflows this year than Invescoâs retail-friendly QQQ Nasdaq 100 Fund, ranking fourth among ETF funds in terms of year-to-date inflows.
While the absolute dollar value of inflows into spot BTC ETFs is indeed not low, it is clear that inflows from net new buyer types such as pension funds are limited.
Spot BTC ETFs are designed to make cryptocurrency investing directly accessible to every mainstream financial institution, but demand for these products from institutional investors has been limited.
Only investment advisors (who allocate private capital that could otherwise be used to buy BTC in other markets) and hedge funds (entities unlikely to have directional BTC exposure) are significant buyers in non-isolated cases.
While the dollar-denominated BTC price did rise following the ETFâs launch, it has yet to keep pace with Wall Streetâs best-performing AI stocks, only barely keeping pace with shares of established companies like General Electric, GoDaddy, Walmart and Progressive Insurance.
Source: TradingView
Spot ETFs did not "work wonders" and drive new capital to buy cryptocurrencies; instead, inflows into BTC ETFs were driven primarily by strong risk-on sentiment in the market. Unfortunately, even with the arrival of this much-anticipated catalyst, BTC failed to break through and maintain its historical highs.
With BTC peaking four months ago and global economic data continuing to weaken, itâs questionable whether broader market tailwinds can continue to support risky crypto assets.
Additionally, given the many ways that existing sophisticated investors can buy exposure to ETH using futures and trust-based products through TradFi, it is unlikely that there is a large amount of capital waiting on the sidelines to purchase spot products with little differentiation.
Given all of the above, the same is true for the ETH ETF. There must be new investor demand for the price of ETH to rise.
A milestone worth celebrating
A spot ETF is the ultimate catalyst to spark investor interest in ETH and permissionless blockchains as a whole, but as approval finally happens and investor excitement about Ethereumâs murky future fades, critical thinking is needed about Ethereumâs current performance.
Ethereum has reached a critical juncture: adoption needs to accelerate for the ecosystem to replace the traditional financial system. Fortunately, ETF approval will put Ethereum in the spotlight in the coming months as issuers promote their products and investors seek information about the blockchain that aims to replace the traditional financial system.
Although the mainstream has not yet explored the hidden on-chain scenarios, financial giants such as BlackRock CEO Larry Fink have personally promoted the bull case for tokenization and Ethereum, which may stimulate non-crypto people to feel and understand blockchain technology.
Once the general public realizes the vast improvement blockchain represents over traditional financial systems, on-chain usage will grow exponentially as more individuals begin to store their wealth in digital assets and leverage blockchain technology, positively impacting the price of cryptocurrencies and the fundamental bull market!
While Bitcoinâs overly simplistic digital gold narrative has failed to spark mainstream enthusiasm for cryptocurrencies and has pushed token valuations to all-time highs, the emergence of bullish sentiment on Ethereum will drive a surge in on-chain usage and allow investors to get more deeply involved in the industry.
ETFs give TradFi giants a reason to be excited about cryptocurrencies and provide Ethereum with the best opportunity to be understood. However, if there is no impressive report card this time, it may have the opposite consequence. This may mark the beginning of Ethereumâs decline and undermine the credibility of the entire crypto revolution narrative.
