Ethereum
Buy the rumor, sell the news? By Investing.com
Spot Ether ETFs, which will allow investors to buy the second-most popular cryptocurrency just like stocks, are set to begin trading in the United States next week.
The Securities and Exchange Commission (SEC) has approved filings from at least three issuers, with a total of eight ETFs expected to launch at the same time.
Speaking to Investing.com, Saul (Shauli) Rejwan, Managing Partner at Masterkey VC, said he believes the launch of Spot Ether ETFs has the potential to propel Ethereum’s price to new all-time highs, similar to what happened with .
“It’s funny to think about it, but the main driver of the market is not memes, Elon Musk, Larry Fink’s admiration for Bitcoin or the opportunities that AI and infrastructure bring to cryptocurrencies. It’s actually US politics that has pushed for regulation after many years of resistance,” Rejwan said.
The major altcoin began its rally in earnest in June as it became clearer that Ether funds would soon be approved.
Rejwan attributed this to “increased accessibility and legitimacy,” which could attract a wider range of investors. He cautioned, however, that market dynamics and general economic conditions will also play a crucial role in determining price movements.
A “buy the rumor, sell the news” type of event?
Rejwan acknowledges this possibility. “It is possible that the launch of Ether ETFs will follow a ‘buy the rumor, sell the news’ model. Just before May, the price of Ethereum was around $2.5k, which indicates that some news is already being priced in.”
“I’m not sure all the news is in. The presidential campaign has just shifted gears and I would say there are more developments on the horizon. My eyes are on the Nakamoto stage in Nashville at the end of the month.”
He notes that market participants often anticipate such events and anticipate their expectations in advance. “When the event occurs, some investors may take profits, leading to short-term volatility. Nevertheless, the long-term impact of Ether ETFs is likely to be positive due to the structural support they provide.”
Comparing Ethereum and Bitcoin ETF Inflows
The January launch of U.S. spot bitcoin exchange-traded funds was one of the most successful in ETF history, attracting about $16 billion in net inflows over its lifetime. As of late June, these funds that track the spot price of bitcoin had nearly $38 billion in assets. However, the holdings of Grayscale, which converted its $27 billion bitcoin fund into an ETF, have fallen by more than a third.
Rejwan expects Ethereum ETF inflows after approval to differ from Bitcoin’s experience due to Ethereum’s unique value propositions.
While Ether has become a top cryptocurrency, its ETFs may be smaller, at least initially, than their Bitcoin counterparts as features like smart contracts and decentralized applications attract a different investor base. “While initial flows may not exactly mirror those of Bitcoin, we anticipate substantial interest from both institutional and retail investors,” he said.
Opening the door to other crypto ETFs
Rejwan believes that the successful launch of Ether ETFs could pave the way for ETFs and other cryptocurrency exchange-traded products.
“Once the regulatory and market frameworks are established for a major asset, it becomes easier to introduce additional products,” he said. This could lead to “a more diverse and robust market” for crypto-based ETFs, broadening investor participation and further legitimizing the space.