Ethereum ETFs Receive Preliminary Green Light: SEC Tells Issuers Trading Can Begin Soon
- Spot Ethereum ETFs may begin trading on July 23, 2024.
- Analysts expect ETH to outperform BTC following the launch of ETH ETFs.
- Ethereum 2.0 Beacon staking contract now holds an all-time high of over 47 million ETH tokens.
Rumors of a July launch for spot Ethereum (ETH) exchange-traded funds (ETFs) appear to have substance as fund issuers receive a ‘preliminary’ greenlight.
With approval looming, will U.S. ETH ETFs cause any major shifts in market dynamics?
Ethereum ETFs
Multiple sources report that the U.S. Securities and Exchange Commission (SEC) has reportedly given the green light to “at least” three of eight funds looking to launch spot ETH ETFs.
With a view to begin trading as soon as next Tuesday, industry sources have said that applicants must submit final offering documents to regulators by the end of this week.
As demonstrated by the billions of net inflows into U.S. spot Bitcoin (BTC) ETFs, institutional appetite for Ethereum ETFs will be just as high. Naturally, this could be a boon for the price of ETH and ETH-based tokens.
ETH Outperforming BTC?
According to a report from Kaiko, Ethereum is projected to outperform Bitcoin after the ETF launch.
In its reasoning, the report highlights the ETH-BTC price ratio that has fluctuated through macro and industry factors, explaining:
“The ETH to BTC, which measures the relative performance of the two assets, remains elevated around 0.05. This is significantly higher than pre-approval levels of nearly 0.045. A stronger ratio suggests ETH could continue to outperform relative to BTC following ETF launches.”
According to Kaiko, ETH has dropped some 20% since the SEC approved the initial spot ETH ETF applications, but this isn’t necessarily a bad sign. If anything, it suggests that the market is “primed” for the launch of Ethereum ETFs.
ETH Supply Shock
Bitcoin ETFs have caused the supply shock of the recent halving to deepen as their BTC feeding frenzy continues to outpace Bitcoin miner production. As a result, many are pondering the impacts that Ethereum ETFs could have on the ETH market.
Ethereum markets are very different from Bitcoin’s, especially considering that no miners hoarding coins can apply downward pressure on the market. This is also because of the current state of token distribution.
Firstly, approximately 10.2% of ETH’s circulating supply is on centralized exchanges (CEXs), marking an 8-year low. Secondly, around 40% of the supply is locked in smart contracts. Of this figure, approximately 28% has been staked , and the other 12% is locked in smart contracts.
ETH scarcity could be a reality. For many, this isn’t a bad thing, and the supply shock will cause the price of ETH to skyrocket. For others, Ethereum ETFs may be a threat to the network’s security and decentralization.
