Ethereum Futures ETFs Debut with Low Trading Volume
New ETH futures exchange-traded fund (ETF) products launched with less than $2 million worth of trading volume, which is a low amount.
Nine Ethereum futures ETFs debuted on Monday in the U.S. after getting the greenlight from the Securities and Exchange Commission (SEC) last weekend. Five of those new ETFs, including the ProShares Ether Strategy ETF, the VanEck Ethereum Strategy, and the Bitwise Ethereum Strategy ETF, offer Ethereum-exclusive futures contracts.
The remainder of the list, including Valkyrie Bitcoin and Ether Strategy ETF, combines both Bitcoin and Ethereum futures products. These firms reportedly renamed the futures contract to offer exposure to Ethereum.
First-day Volume Soft
Ethereum futures contracts are financial derivatives that allow investors to speculate on the future price of Ethereum. The ETF’s performance would be tied to the performance of the Ethereum futures contracts it holds.
Of the anticipated firms, Volatility Shares, however, canceled its plan to launch the futures product. Justin Young, co-founder of the asset management firm said that the timing wasn’t right; but asserted that the product would arrive in the future.
Young might be correct about the timing. While the debut of those Ethereum futures ETFs has attracted mainstream attention, their first-day trading volume might fall short of expectations. The total trading volume of all nine ETFs stood at less than $2 million on the debut date.
There was no solid winner on the first day, according to Bloomberg ETF analyst Eric Balchunas. However, Valkyrie’s BTF was the top-performing ETF with $882,000 worth of trading volume.
The analyst said that all nine products “were pretty average” and lower than what he predicted. He added that it was “a long run,” and ETF investors would be more interested in spot ETFs.
The SEC remains skeptical toward a crypto spot ETF. To date, the federal agency has rejected all Bitcoin and Ethereum spot ETF filings, citing the high risk of market manipulation and lack of surveillance-sharing agreement.
Additionally, the SEC recently extended deadlines to issue a decision on whether or not a spot Bitcoin ETF would be approved. Things are obviously easier with crypto futures ETFs. Prior to Ethereum futures products, a number of Bitcoin futures ETFs have been approved.
Grayscale Files for Spot ETF
Grayscale Investments, reportedly filed to covert its Grayscale Ethereum Trust (ETHE) to a spot Ethereum ETF in partnership with NYSE Arca Exchange. With the latest move, Grayscale is gearing toward the future approval of a spot crypto ETF featuring Ethereum and Bitcoin, like other high-profile companies.
Previously, Grayscale made a similar move to convert its Bitcoin Trust to a Bitcoin spot ETF. The filing was initially denied by the SEC, leading to a lawsuit initiated by Grayscale against the agency. In August, the court ruled Grayscale’s victory over the SEC and thus requested the entity to review Grayscale’s application.
Grayscale’s Ethereum Trust has emerged as a dominant force in the world of cryptocurrency investments, boasting an impressive $5 billion in assets under management. If approved, Grayscale’s Bitcoin Trust will pioneer the launch of the first-ever spot Bitcoin ETF in the United States.
This development could further diversify cryptocurrency investment options for both institutional and retail investors.
Speaking with CNBC today, Bitwise CIO Matt Hougan and VanEck CEO Jan van Eck, kept their bet on SEC approval of spot Bitcoin ETFs. Hougan expected to see the spot product within this year and Jan van Eck predicted it would come early in 2024.
Meanwhile, the majority of the crypto community is optimistic about a potential approval sooner or later since Wall Street’s big players, especially BlackRock, joined the race. However, others argue that this positive scenario isn’t guaranteed, particularly when the regulatory landscape in the country remains challenging.