Upcoming Ethereum ETFs to Trail Bitcoin ETFs in Market Performance

The U.S. Securities and Exchange Commission (SEC) approved the listing of eight Ethereum-based exchange-traded funds (ETFs) on May 23, with trading expected to commence in July. This will provide investors exposure to Ethereum without needing to hold the cryptocurrency directly.

Comparing Bitcoin and Ethereum ETFs

Bitcoin ETFs, approved by the SEC in January, have amassed $54 billion in assets under management as of July 2. In contrast, Ethereum ETFs are expected to underperform but offer unique value propositions to investors.

Ethereum ETFs Trading Timeline

The SEC has approved Ethereum ETFs from Grayscale Ethereum Trust, Bitwise Ethereum ETF, BlackRock’s iShares Ethereum Trust, and others. These ETFs will be listed on major exchanges like the NYSE and Nasdaq. The funds have started filing their S-1 forms, with a Bloomberg report suggesting a mid-July start for trading.

Potential Price Increase for Ether

Analysts expect increased trading activity post-launch to drive Ether’s price up. Ryan Lee, Chief Analyst at Bitget Research, projects a potential price rise of 22%, possibly reaching $4,724 if the current purchasing power shifts towards Ethereum.

Less Impactful Compared to Bitcoin

Ethereum, known for its community and technological innovations, differs from Bitcoin’s position as a digital gold store of value. Ethereum supports thousands of applications and NFTs, driving broader crypto adoption. However, experts like Musthafa Ahmed from BasedVC predict Ethereum ETFs will have a less significant impact compared to Bitcoin ETFs.

Volatility and Risks

Investors should brace for volatility with Ethereum ETFs due to Ether’s inherent price swings. The performance of these ETFs could be influenced by changes in Ethereum’s adoption and dominance in DeFi. The SEC’s stance on innovations like staking could also impact future growth and regulatory challenges.

Regulatory Challenges and ETH 2.0

Ethereum’s shift from proof-of-work to proof-of-stake, part of the ETH 2.0 initiative, has significantly reduced carbon emissions. However, the SEC’s refusal to approve staking remains a hurdle, limiting some benefits of the new ETFs.