Ethereum ETFs Are Live: Here's How Experts Assess Their Launch

Nine spot Ethereum ETFs began trading on US exchanges Tuesday, marking another milestone in the mainstream adoption of digital assets.

What Happened: This launch comes just six months after the debut of spot Bitcoin ETFs in the United States, which have already accumulated over $54 billion in assets under management.

The new ETH ETFs, offered by major financial players including BlackRock BLK, Fidelity, Grayscale, and others, are now available on the Cboe CBOE, NYSE Arca, and Nasdaq exchanges.

Grayscale’s Ethereum Mini Trust stands out with the lowest fee of 0.15% and is set to start with approximately $1 billion in assets.

In the early hours of trading, the newly launched Ethereum ETH/USD ETFs demonstrated significant market interest.

According to data from Yahoo Finance, analyzed by The Block Pro Research, these funds collectively amassed $205 million in trading volume within the first 60 minutes.

The momentum continued, with the total volume reaching $300 million approximately 75 minutes after the market opened, at around 10:45 a.m. EST.

To put these figures into perspective, Bloomberg’s Senior ETF Analyst Eric Balchunas offered his insights on the initial trading performance.

“Here’s volume after first 15 minutes of trading. Total of $112m traded for the group (which is A TON vs a normal ETF launch but only about half of what bitcoin ETFs’ volume pace was on DAY ONE, altho 50% would exceed expectations IMO),” he said.

Here's where we at after 90 minutes. $361m total. As a group that number would rank them about 15th overall in ETF volume (about what $TLT and $EEM trade), which is Top 1%. But again compared to a normal ETF launch, which rarely see more than $1m on Day One, all of them have… pic.twitter.com/R5UgQFR1L6

— Eric Balchunas (@EricBalchunas) July 23, 2024

He added that the comparison excluded GBTC and if it was included the ETH ETFs do about 20% to 25% of the volume of the BTC ETFs. “Regardless, very solid showing,” he said.

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What Others Said: Nathan McCauley, CEO of Anchorage Digital, hailed the launch as “a major step forward in regulatory clarity for the digital asset class.”

He emphasized that the ETF wrapper will provide a new pathway for safe and compliant exposure to Ethereum, potentially driving billions in inflows from both institutions and consumers.

Konstantin Shulga, CEO and co-founder of Finery Markets, noted the accelerated adoption rate of digital assets and increased institutional involvement.

He pointed out that Ethereum trading volumes rose by 32% in the first half of 2024 compared to the same period in 2023 in the OTC market.

However, Shulga cautioned that the full impact of ETF approvals may not be realized for six to nine months, as it takes time for innovative products to be fully integrated into financial players’ portfolios.

Tom Duff Gordon, VP of International Policy at Coinbase COIN, described the approval of spot ETH ETFs as “a significant milestone in the crypto ecosystem,” highlighting the ongoing shift towards digital assets in the global financial system.

Coinbase is serving as the custodian for 8 of the 9 newly approved ETH ETFs.

However, Sergei Gorev, risk manager at YouHodler, offered a more cautious perspective.

He noted that despite the launch, ETH’s price dynamics appear weak, suggesting that the market may not fully believe in the great success of Ethereum ETFs.

Gorev also pointed out the possibility of a “buy-on-hearsay and sell-on-facts” scenario, particularly given the timing of the launch during a period when many investors are on vacation.

David Ben Kay, a former advisor and member of the governing board of the Ethereum Foundation, said the launch is a step closer to broader adoption and closer integration into traditional financial markets.

This launch comes at a time of increasing institutional interest in digital assets, as Ethereum continues to solidify its position as a key player in the blockchain and decentralized finance (DeFi) sectors.

By providing a regulated investment vehicle, investors may have a greater sense of security and compliance.

However, due to fees and market inefficiencies the ETF price may not always perfectly track Ethereum’s spot price.

“Despite risk mitigation, Ethereum remains a volatile asset, and ETF values can fluctuate accordingly. Management fees and expenses associated with ETFs can impact overall returns compared to direct cryptocurrency holdings,” he said.

“All in all, the issuance of the spot ETH ETF is definitely a positive move in the journey of broad adoption for cryptocurrencies, but it's likely that initial adoption and market impact may be limited until there is broader acceptance and understanding of crypto ETFs,” he added.

As the cryptocurrency landscape continues to evolve rapidly with developments like these ETH ETFs, industry professionals and enthusiasts alike are eager to discuss the implications and future trends.

What’s Next: The upcoming Benzinga Future of Digital Assets event on Nov. 19 will provide a timely platform for such discussions.

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