Ether ETFs and Tokens See Limited Market Success as Trading Volume Exceeds $1 Billion
The approval of nine ETFs tracking the Ether cryptocurrency by the Securities and Exchange Commission (SEC) came just seven months after the introduction of spot Bitcoin ETFs. However, the market did not favor these new products, with significant losses recorded in their initial two days of trading.
Each of these ETFs is designed to follow the spot price of Ether, the second-largest cryptocurrency globally and the backbone of the Ethereum blockchain. On the first day of trading, the total volume for these nine ETFs exceeded $1.08 billion, as reported by Bloomberg Intelligence.
Ric Edelman, the founder of the Digital Assets Council of Financial Professionals, highlighted the distinction between Bitcoin and Ethereum, noting that while Bitcoin serves as a store of value and a means of money transmission, Ethereum enables the programming of conditions for transactions. This feature allows for secure and swift transactions without the need for intermediaries, making it applicable across various industries.
Contrary to expectations of a price surge following the ETFs’ launch, both Ether and the ETFs experienced declines. Ethereum’s native token dropped by 1% on the first day, followed by a 4.4% plunge the next day, falling below $3,400 to $3,322.33.
James Seyffart, a research analyst at Bloomberg Intelligence, emphasized that the introduction of Ether ETFs does not alter the underlying assets or protocols but instead establishes connections between Ethereum and traditional financial markets. This move is seen as a positive step for the crypto industry, enhancing accessibility to cryptocurrencies for a broader investor base.
The ETFs offer bridges from decentralized finance to a wider audience, including those restricted from purchasing actual cryptocurrencies or those seeking a more straightforward investment process. Additionally, the ETF structure provides regulatory clarity and acceptance by federal regulators like the SEC.
Grayscale Investments received SEC approval to convert its Grayscale Ethereum Trust (ETHE) into a spot ETF, becoming the largest spot Ether ETF with $9.19 billion in assets under management. Other ETFs like Blackrock’s iShares Ethereum Trust (ETHA), Fidelity Ethereum Fund (FETH), Bitwise Ethereum ETF (ETHW), VanEck Ethereum ETF (ETHV), Franklin Ethereum ETF (EZET), Invesco Galaxy Ethereum ETF (QETH), and 21Shares Core Ethereum ETF (CETH) also entered the market with varying performance and expense ratios.
Investors are advised to consider factors such as expense ratio, liquidity, assets under management, performance, and issuer education when selecting among these ETFs. The launch of Ether ETFs is seen as a significant milestone, indicating growing acceptance and adoption of cryptocurrencies within the financial industry.
