Traders’ positions are reflecting a moderate level of excitement in the market regarding the upcoming launch of spot Ethereum ETFs. While the week may have been relatively uneventful, the expectations surrounding these funds are high. Analysts at K33 Research are predicting that the arrival of Ethereum ETFs could potentially follow a similar explosive path as seen with the launch of Bitcoin ETFs. The research suggests that an estimated $4 billion could flow into these investment vehicles within the first five months after their launch. This anticipated influx of funds is expected to bring significant attention to the world of Ethereum-based exchange-traded products in the United States.
K33 Research drew comparisons between the assets under management in existing Ethereum-based exchange-traded products globally and similar Bitcoin products. The analysis also included looking at the open interest in futures contracts on the Chicago Mercantile Exchange (CME), which is a key marketplace for institutional investors. The report indicates that while the current open interest in ETH futures on the CME is at 23% of the size of BTC futures, the average share of ETH futures has been around 35% of BTC futures since they started trading on the CME in 2021. This data suggests a strong institutional demand for exposure to Ethereum in the US market, according to the research firm.
The approval of spot Bitcoin ETFs previously triggered a significant rally in the price of the digital asset, pushing it to new all-time highs. K33 Research suggests that the introduction of Ethereum ETFs could lead to ETH outperforming BTC after a period of lagging behind. Additionally, Bloomberg ETF analyst Eric Balchunas has predicted that the spot Ethereum ETFs could attract between 10% and 20% of the inflows seen by Bitcoin ETFs. While some may view 10% as overly optimistic, even capturing 20% of the inflows would be considered a major success for Ethereum ETFs in the market.
One interesting trend noted by K33 Research is that the applicants for spot Ethereum ETFs have strategically omitted parts from their filings that would have allowed for staking of the funds’ assets. This decision is likely an attempt to address the concerns of the Securities and Exchange Commission (SEC), which views staking as potentially constituting unregistered securities. The SEC has previously taken action against cryptocurrency platforms offering staking services to US customers. Notably, in Canadian Ethereum ETFs, 99% of assets under management are held in funds that do not involve staking, while the figure is 98% for European products.
The anticipation surrounding the launch of spot Ethereum ETFs is palpable, with traders positioning themselves for potential gains in the market. The research and analysis conducted by firms like K33 Research offer valuable insights into the possible impact of Ethereum ETFs on the broader market. As the regulatory landscape continues to evolve, it will be interesting to see how the introduction of these investment vehicles shapes the future of Ethereum and its position in the world of digital assets.