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Ether Futures ETF: “The Opening Band Nobody’s Heard Of” But Low Volume no Cause for Concern

Last Updated October 6, 2023 1:29 PM
Teuta Franjkovic
Last Updated October 6, 2023 1:29 PM

Key Takeaways

  • Ethereum ETFs launched this week, but their sluggish start disappointed investors.
  • The combined trading volume for the six funds reached $1.92M.
  • Analysts predict Ethereum’s rise and fall will follow a pattern akin to Bitcoin’s initial boom and bust.

Ether displayed weaker performance within the cryptocurrency market following the commencement of trading for the first-ever ETFs incorporating futures of the second-largest digital currency in the United States.

This week, six new Ethereum Futures ETFs were released on the market. Exchange-traded funds have been introduced by companies like ProShares, VanEck, and Bitwise, among others, and are based on contracts to buy or sell cryptocurrencies on particular dates.

Initial data shows  that the funds have received about $15 million. At the time of writing, Ethereum was trading flat  at around $1,645. Bitcoin , on the other hand, was up by 1.25% to trade at $28,030.

The six funds generated a total trading volume of $1.92 million on October 2. The ProShares Ether Strategy ETF, the largest of them all, made a major contribution with a trading volume of $878,560, or 45.7% of the total volume.

‘Buy the Rumour, Sell the News’

Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, explained that any crypto-related launch tends to be a ‘buy the rumor, sell the news’ event.

“If you look at BITO, Bitcoin went down a lot after that. I wouldn’t be surprised if this happens with futures ETFs either,” he stated. 

The debuts mark the end of a multi-year struggle by businesses to offer Ether investment vehicles.

Ether futures ETFs received almost $2 million in flows on Monday, October 2. When compared to the excitement surrounding the ProShares Bitcoin Strategy ETF (BITO), which was introduced in 2021 at the height of the cryptocurrency craze, it was quite subdued. Initially, BITO accumulated $1 billion in assets in just two days, but with time, flows slowed.

It only made up 0.2% of the trade volume compared to the first day of Bitcoin futures trading, a user on X pointed out: 

Balchunas commented  it appears that they were unable to get funding before launching. He added that they simply let nature take its course, and it appears that VanEck and ProShares currently have volumes that are fairly equal.

The newly launched funds are part of a larger wave of cryptocurrency-focused ETF applications recently filed with the US Securities and Exchange Commission (SEC), with BlackRock Inc.’s June Bitcoin ETF filing being the most anticipated outcome. Previously, the SEC prohibited such funds from trading because authorities were reticent to approve these kinds of products.

“The holy grail is the spot Bitcoin ETF. This is Ether and Future. They’re like the opening band that nobody’s heard of,” Balchunas noted .

Overall, crypto-based products have had trouble piqueing investors’ attention this year. The SEC has declared a number of tokens to be securities and is involved in various lawsuits pertaining to cryptocurrencies.

Balchunas concluded that “any ETF that is crypto-related should be viewed as a bridge to the advisory wealth management world.” “These bridges will facilitate traffic in the long term and, overall, are a good thing for the underlying assets,” he said.

More Bids for Ethereum ETFs

The SEC recently declared that it would postpone making decisions for Ethereum spot ETF approval. There won’t be a declaration until at least the end of 2023.

The SEC has delayed the decision for both the ARK 21Shares Ethereum ETF and the VanEck Ethereum ETF, according to two independent filings.

On September 6, both businesses submitted their bids for the Ethereum spot ETF.

If approved, these would be the first US-based Ether-based ETFs offering direct exposure to ETH.

Grayscale joined the group of financial institutions that have applied for an Ethereum spot ETF  on October 2. The request was submitted to the SEC in a filing by the New York Stock Exchange (NYSE).

The application requests authorization to transform Grayscale Ethereum Trust (ETHE) into a spot Ethereum ETF.

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