Ethereum ETF: When Will They Launch & What Will The Price Impact Be?

TLDR

• Bloomberg analyst Eric Balchunas reaffirms his prediction of a July 2 launch date for U.S. spot Ethereum ETFs, following a surge in amended S-1 filings.
• Several major asset managers, including BlackRock, VanEck, and Fidelity, have submitted amended S-1 filings, with some revealing competitive fee structures.
• Analysts have mixed views on the potential demand for Ethereum ETFs, with projections ranging from $1-3 billion to $4 billion in net inflows.
• Some experts, like Nate Geraci of ETF Store, suggest that Ethereum ETF approval could come as early as next week.
• The SEC has already approved 19b-4 filings for eight spot Ethereum ETFs, but still needs to greenlight their S-1 filings before trading can begin.

As the launch of spot Ethereum ETFs in the United States draws near. Industry experts and analysts are closely watching developments, with some predicting an imminent launch while others remain cautious about market demand.

Bloomberg’s senior ETF analyst, Eric Balchunas, has doubled down on his prediction of a July 2 launch date for U.S. spot Ethereum ETFs. This forecast comes in the wake of a surge in amended S-1 (registration statement) filings observed on Friday. Balchunas noted,

“We will see a bunch of amended S-1s filed today, probably later this afternoon. Then the ball’s in SEC’s court to let issuers know about any final changes and effectiveness (aka final approval).”

The U.S. Securities and Exchange Commission (SEC) has already approved 19b-4 filings for eight spot Ethereum ETFs last month.

However, the regulatory body still needs to greenlight their S-1 filings before these ETFs can begin trading. SEC Chairman Gary Gensler has indicated that spot Ethereum ETFs will launch this summer, pending the approval of their S-1 filings.

Major asset managers have been quick to respond to this opportunity. BlackRock, the world’s largest asset manager, has entered the market with a $10 million seed investment.

VanEck has filed with a competitive fee of 0.20%, closely matching Franklin’s 0.19%. Other significant players like Fidelity, Bitwise, 21shares, and Grayscale have also filed, although they have not yet disclosed their fees. The competitive fee structures suggest that issuers are positioning themselves aggressively in anticipation of strong market interest.

Market observers are divided on the potential demand for Ethereum ETFs. JPMorgan analysts project that these ETFs could attract about $1 billion to $3 billion in net inflows in the second half of 2024.

Bloomberg’s Balchunas estimates that Ethereum ETF products could capture only 20% of the Bitcoin ETF market share, basing his projection on the current demand for ETH vs BTC in the futures market.

On the more optimistic side, K33 Research’s Vetle Lunde estimates that demand for ETH ETF products could reach $4 billion in net inflows in the first five months alone. Bitwise CIO Matt Hougan views the second half of 2024 as full of ‘tailwinds’ for ETH demand.

A recent Deribit Insights report also painted a bullish future based on recent options data, noting significant purchases of ETH September $4,000 call options.

1) Decent clip of ETH Sep 4k Calls bought ($12m premium), and BTC Jun 65k+July75k Calls rolled to increased exposure in Dec 75+90k Calls, showing increased mid-term optimism.Early trades in the last few hours supporting range lows with Sep 60k Puts sold, and Jun RR Calls bought. pic.twitter.com/HEgCEXhzjh

— Deribit Insights (@DeribitInsights) June 20, 2024

The potential impact on Ethereum’s price is also a topic of speculation. QCP Capital analysts suggest that ETH could surge above $4,000 and potentially retest its record high of $4,800 if the ETFs capture 10-20% of Bitcoin ETF flows.

However, some market participants, like Quinn Thompson, founder of crypto hedge fund Lekker Capital, believe the market might be underestimating the positive impact of the upcoming ETH ETF.

Nate Geraci, president of ETF Store, has suggested that approval could come as early as next week. This aligns with Balchunas’ July 2 prediction, which is strategically timed to coincide with the U.S. Independence Day holiday. Former SEC official Jay Clayton has also reinforced expectations for imminent approvals.

It’s worth noting that while most major players are pushing forward with their ETF plans, Hashdex, a notable player in the ETF arena, has withdrawn its application for a spot Ethereum ETF without disclosing reasons or future plans.

Instead, they have presented a mixed Ethereum and Bitcoin solution.

The coming weeks promise to be crucial for the Ethereum market and the broader cryptocurrency ecosystem.

Whether the ETFs launch on July 2 or later in the summer, their impact on market dynamics, institutional involvement, and Ethereum’s price will be closely watched by investors.