Ethereum
ETH ETF: What we’re watching
Traders looking for a new market “narrative” have been eagerly awaiting this first release. But it’s hard to predict the exact impact of this new release. Here are four things to watch for.
What effect will the Ether ETF have on the price of the underlying asset? What about the price of bitcoin? What about the rest of the cryptocurrency market?
Since the Bitcoin Spot ETF began trading in the United States in January, bitcoin has jumped 56% and ether has jumped 38%.
Should we expect the same kind of price shock from the Ethereum ETF? Will Ether go up? Will Bitcoin too? Will other cryptocurrencies follow suit?
When the Ether ETF begins trading, more traditional investors will be able to gain exposure to the price of Ether, but will their financial investment do anything to drive adoption of the Ethereum network?
ETFs will undoubtedly bring validity to the asset in the eyes of traditional investors. But is there a straight (or even curved) line between a financial advisor buying the Ether ETF into an IRA for a client and the advisor ultimately staking their Ether, and then the advisor buying the latest and greatest ERC-20 memecoin?
I think it’s possible, but I wouldn’t bet on it because anecdotally I see people care about price first, then second, then third and above all.
I expected cryptocurrencies to be included in ETFs because the Securities and Exchange Commission (SEC) has always thought of these assets as securities, and There are many ETFs filled with stocks. Nevertheless, the SEC has been downright aggressive toward cryptocurrencies. Will that change with the Ether ETF?
The SEC just dropped its case against Consensys after the Ethereum software company sued the SEC in Aprilalleging that the regulator was investigating whether Ethereum, post-mergercould be a security. Then maybe we’ll see an environment where the SEC stops interfering. That, or maybe the ETF will make it even clearer that ether is actually a security and the SEC will tighten the screws.
In general, Ethereum fans are more crypto polytheists than Bitcoin fans aresupporting a “multi-chain future.” So while I suspect there is some overlap in investor bases for the Bitcoin ETF and the Ether ETF, I’m not sure what to make of the average Ether ETF investor.
Are we going to see asymmetrical profit-seeking by family offices and hedge funds? Old-school financial advisors looking to beat inflation? Degenerate 25-year-olds trying to make huge profits so they can retire early and travel the world while they’re still young? Is this an Ether ETF strictly for institutional investors, while retail investors stick to holding their Ether in Coinbase or Robinhood?
And who will lead the dance on the issuer side? Will BlackRock also be the leader in capital flows with the Ether ETF?
Probably, and whether that’s a good thing or a bad thing, it’s a story we’ll be telling starting Tuesday.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.