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Trading for spo Ethereum ETFs is scheduled to start today at 9:30 AM EDT.
Key Takeaways
BlackRock's Ethereum ETF started pre-market trading early on July 23, 2024, after SEC approval. Analysts estimate up to $5.4 billion inflows into the ETFs within six months. <?xml encoding="UTF-8"?>BlackRock’s Spot Ethereum ETF has commenced pre-market trading early Tuesday, following the SEC’s approval for multiple spot Ethereum ETFs.
This development allows mainstream investors to directly invest in Ethereum without managing the digital asset themselves, although functionality for staking and other stake-based derivatives have been removed prior to the approval.
The SEC’s approval for major asset management firms including Fidelity, Grayscale and Franklin Templeton, represents a major milestone for Ethereum and the broader crypto market. Trading of these ETFs is scheduled to start today at 9:30 AM EDT. At the time of writing, Ethereum’s price stands at approximately $3,525, up 1% over the past 24 hours.
While some analysts predict these ETFs could see inflows of up to $5.4 billion in the first six months, algorithmic trading firm Wintermute offers a more conservative outlook. The firm forecasts lower-than-anticipated demand, projecting inflows closer to $3.2 to $4 billion. Wintermute expects Ethereum ETFs to see 15% to 20% of the flow observed for Bitcoin ETFs, potentially leading to an 18% to 24% price increase for ETH.
Two factors for ‘muted demand’ on Ethereum ETFs
Wintermute attributes its less optimistic forecast to two key factors.
Primarily, the absence of a staking mechanism within the ETFs may diminish Ethereum’s appeal as an investment vehicle. Staking, a core component of Ethereum’s security model since its shift to proof-of-stake in 2022, allows users to earn rewards by delegating tokens to the network.
The inability to stake Ethereum within these ETFs could make them less attractive to yield-seeking investors. Crypto Briefing’s previous coverages on this matter explain the nuances in detail.
Wintermute also cites the lack of a shared narrative to attract investors as a potential hurdle for Ether ETFs. Unlike Bitcoin, which has successfully tapped into the “digital gold” narrative, Ethereum’s more complex ecosystem and diverse applications may make it challenging to present a unified investment thesis to potential ETF buyers.
Despite these challenges, Ethereum’s dual functionality as both a digital currency and a platform for decentralized applications and smart contracts may appeal to investors interested in technological innovations and diverse blockchain applications. The launch of Ethereum ETFs represents a significant step in making cryptocurrency investments more accessible to mainstream investors, potentially impacting both the crypto market and broader financial landscape.
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