Key Takeaways
- 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.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
