Monochrome advocates for Ethereum ETF listing on Cboe Australia
Monochrome Asset Management recently submitted a filing to introduce an Ethereum exchange-traded fund (ETF) on Cboe Australia under the ticker IETH, as revealed on September 5.
The ETF’s primary objective is to provide retail investors with a regulated avenue to participate in Ethereum. It will operate as a dual-access fund, enabling investors to opt for cash or in-kind redemptions.
The firm anticipates a verdict on the application by the conclusion of the month. If approved, IETH will broaden the range of regulated crypto investment opportunities for Australian investors. This move follows the earlier debut of Monochrome’s Bitcoin ETF (IBTC), which marked Australia’s inaugural ETF directly holding Bitcoin.
As per the company’s website, IBTC’s Bitcoin holdings were valued at $11.3 million as of September 4.
Challenges confront Ethereum ETFs, with Monochrome’s plan emerging amidst struggles faced by similar products in the United States. US-traded spot Ethereum ETFs experienced negative net flows of $476 million during their initial trading phases, primarily due to outflows triggered by Grayscale’s ETHE.
Market analysts attribute this underperformance to Bitcoin’s first-mover advantage, the absence of staking options in Ethereum ETFs, and lower liquidity in the Ethereum market, rendering these products less appealing to institutional investors.
Quinn Thompson, founder of crypto hedge fund Lekker Capital, highlighted the significant contrast in early Bitcoin and Ethereum flows. He pointed out the lack of substantial interest or inflows into other Ethereum ETFs to counterbalance the outflows, despite a slowdown in Grayscale outflows.
Moreover, the ETHE overhang was relatively smaller than that of GBTC, partly due to forced selling by insolvent entities. Thompson underscored that Ethereum ETFs faced even more challenges considering Bitcoin’s headwinds. He emphasized the current lack of demand for ETH at its current valuation.
Nonetheless, Bloomberg Senior ETF analyst Eric Balchunas expressed confidence that the outflows are temporary. He anticipates that inflows into the newly launched ETFs will eventually offset the current outflows.
