Galaxy Digital: Ethereum (ETH) ETFs Expected to Launch in July 2024, SEC Approval Sparks Market Excitement

The
cryptocurrency
market
is
abuzz
with
anticipation
as
the
U.S.
Securities
and
Exchange
Commission
(SEC)
has
approved
10
Ethereum
(ETH)
spot
ETFs,
paving
the
way
for
their
launch
in
July
2024.
According
to

Galaxy
Digital,
the
SEC’s
approval
of
all
19b-4
filings
on
May
23,
2024,
marks
a
significant
milestone
in
the
cryptocurrency
industry,
potentially
drawing
substantial
investor
interest.

Market
Impact
of
Bitcoin
ETFs

The
performance
of
Bitcoin
ETFs,
which
launched
on
January
11,
2024,
has
set
a
precedent
for
Ethereum
ETFs.
Bitcoin
ETFs
have
already
garnered
$15.1
billion
in
net
inflows
by
mid-June
2024.
Analysts
predict
that
Ethereum
ETFs
could
achieve
20-50%
of
Bitcoin
ETF
net
inflows
over
the
first
five
months,
targeting
$1
billion
per
month.

Investor
Interest
in
Ethereum
ETFs

The
primary
market
for
these
ETFs
is
expected
to
be
independent
investment
advisors
and
those
affiliated
with
banks
or
broker-dealers.
Ethereum’s
unique
characteristics,
such
as
substantial
portions
locked
in
staking,
bridges,
and
smart
contracts,
make
it
more
price-sensitive
to
ETF
inflows
compared
to
Bitcoin.

Recent
Developments
and
Market
Predictions

Despite
initial
skepticism
about
the
SEC’s
approval,
Bloomberg
analysts
Eric
Balchunas
and
James
Seyffart
increased
the
likelihood
of
approval
to
75%
after
reports
of
SEC
engagement
with
securities
exchanges.
All
applications
for
spot
Ether
ETPs
were
approved
by
the
SEC
in
late
May,
and
trading
could
commence
as
early
as
the
week
of
July
11,
2024.

Challenges
and
Considerations

Several
issuers
have
withdrawn
their
applications,
including
ARK,
Valkyrie,





Hashdex,
and
WisdomTree.
Grayscale
is
seeking
to
convert
the
Grayscale
Ethereum
Trust
(ETHE)
into
an
ETP,
similar
to
its
Grayscale
Bitcoin
Investment
Trust
(GBTC).
The
SEC’s
approval
of
rule
changes
for
listing
spot-ETH
ETPs
on
exchanges
is
a
critical
step,
but
individual
issuers
must
still
finalize
their
registration
statements.

Bitcoin
ETFs
have
provided
valuable
insights.
Their
cumulative
net
inflows
have
surpassed
$15
billion,
averaging
$136
million
per
trading
day.
This
success
has
implications
for
the
potential
demand
and
price
impact
of
Ethereum
ETFs.
Ethereum’s
tighter
supply
on
exchanges
and
lower
net
emissions
suggest
it
could
be
more
price-sensitive
to
ETF
inflows.

Institutional
and
Retail
Demand

Bitcoin
ETFs
have
seen
significant
retail
demand,
with
institutional
interest
gradually
increasing.
Over
900
U.S.
investment
firms,
including
major
banks
and
hedge
funds,
hold
Bitcoin
ETFs.
Wealth
management
platforms
have
yet
to
fully
ramp
up
access
to
Bitcoin
ETFs,
but
potential
future
institutional
platform
access
could
be
a
significant
catalyst
for
both
Bitcoin
and
Ethereum
adoption.

Structural
Differences
Between
BTC
and
ETH

The
market
cap
of
Bitcoin
is
currently
2.9
times
that
of
Ethereum.
Futures
markets
for
Bitcoin
are
approximately
twice
as
large
as
those
for
Ethereum.
Based
on
these
metrics,
Ethereum
spot
ETF
inflows
are
estimated
to
be
about
one-third
of
Bitcoin
ETF
inflows,
potentially
reaching
$1
billion
per
month.

Structural
differences,
such
as
the
lack
of
staking
rewards
for
Ethereum
ETFs,
could
impact
demand.
Grayscale’s
ETHE
conversion
to
an
ETF
may
also
result
in
significant
outflows,
similar
to
what
was
observed
with
GBTC.

Future
Outlook

Overall,
the
launch
of
Ethereum
spot
ETFs
is
expected
to
have
a
positive
impact
on
market
adoption
of
Ethereum
and
the
broader
cryptocurrency
market.
Expanded
accessibility
and
greater
acceptance
through
regulatory
approval
and
trusted
financial
services
brands
are
key
factors
driving
this
optimism.

The
introduction
of
Ethereum
ETFs
could
also
influence
the
approval
of
ETFs
for
other
altcoins
in
the
future,
further
broadening
the
scope
of
cryptocurrency
investments
available
to
retail
and
institutional
investors.

Image
source:
Shutterstock