Ethereum ETFs begin trading Tuesday. Here’s what you need to know.

New place ETF for EthereumThe two funds, which will allow investors to buy the second-most popular cryptocurrency in the form of shares, are expected to begin trading on Tuesday, July 23. The Securities and Exchange Commission has given the green light for at least three funds to go public that day, according to sources. told Reutersalthough it is estimated that a total of eight Ethereum ETFs will be launched simultaneously.

These instruments follow in the footsteps of the eleven Bitcoin spot ETFs. Having accumulated over $54 billion in assets under management since its launch in January, Bitcoin has soared 47% this year. Here’s everything you need to know about their Ethereum counterparts.

What is an Ether spot ETF?

Ether is the native cryptocurrency of the Ethereum blockchain. Despite the SEC’s decision ReservationsEther is legally considered a commodity, but the corresponding ETFs will be securities.

ETFs first came to market in 1993. These funds pool a basket of securities, such as a handful of different energy stocks, and are priced according to the indexes they track. They are listed on exchanges and can be traded during market hours, functioning like stocks.

Spot Ether ETFs will track the spot (or current) price of Ether. The products give investors access to the underlying cryptocurrency without the need to own a cryptocurrency wallet. The ETFs will be set up as grantor trusts, meaning investors will own a share of the Ether held by the trust.

Who issues them and what are the costs?

Eight asset managers are proposing to offer Ethereum ETFs: Black rockArk Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Franklin Templeton and Invesco/Galaxy Digital. Each instrument will be virtually identical, so the fees charged to investors are competitive. So far, we know that Franklin Templeton will charge 0.19%, VanEck 0.20%, and Invesco and Galaxy Digital will charge 0.25% for their jointly filed ETF.

The full list of fees will be revealed when the final registration statements, or S-1s, are filed with the SEC. That will happen Tuesday, if trading begins for all eight stocks.

Where can I access it?

They will be listed on the NasdaqChicago Board Options Exchange (CBOE) and New York Stock Exchange.

Why would someone buy an Ethereum ETF?

Bitcoin and Ether tokens represent units of ownership – and therefore value – of an underlying blockchain. Beyond that they are very different.

While Bitcoin can be a long-term hedge against inflation, Ethereum is closer to a technology investment. The main principle of blockchain is to “remove the middleman and enable 24/7 availability of financial services, such as trading and lending, in addition to tokenization, digital collectibles, and digital identity,” Vetle Lunde, senior analyst at K33 Research, told Fortune.

While cryptocurrency markets are currently highly correlated, that may not always be the case, he adds. As such, Ether ETFs allow investors to diversify which sectors of the crypto economy they want to invest in.

Will their popularity match that of spot Bitcoin ETFs?

Demand for these funds will be 20% higher than for spot Bitcoin ETFs, Bloomberg ETF analyst James Seyffart told Fortune. That’s because Ether’s market cap is about a third of Bitcoin’s. Plus, he adds, ETFs won’t benefit from a key advantage of holding Ether: Investors won’t be allowed to betthat generates returns. But even at this smaller size, they would be “extremely successful” by any ETF launch standard, Seyffart says. Similarly, K33 Research predicts that in the first six months of trading, capital inflows will amount to $4 billion, or a quarter of spot Bitcoin ETFs.

To judge their success, it’s critical to assess performance after six months of trading, rather than just “game day” and the first few weeks, Leah Wald, CEO and president of Cyberpunk Holdings Inc., told Fortune. Launched in the summer, they come to market at a time when trading is typically “more muted,” she said. Additionally, success should also be judged on volume and distribution, rather than just inflows, because the health of those metrics puts long-term AUM growth at the forefront, she added, as investors feel safe allocating dollars to these new names.

Who will invest in these projects?

Institutional investors, such as hedge funds, pension funds, banks and endowments. Retail investors will also have access, either by buying them directly or through portfolio allocations through wealth advisors. The latter group will likely dominate the first six months of trading, as T1 13F Bitcoin spot ETFs reveal that over 80% of total assets under management came from retail investors.

How will ETFs impact the cryptocurrency market?

If K33’s forecast of a $4 billion inflow over six months proves accurate, at current prices, that would mean 1% of all Ether in circulation would be absorbed by ETFs by the end of the year. That absorption is “well positioned” to bolster Ether’s price in the second half of the year, Lunde believes.

Inflows would also be bullish for the broader market, as history suggests. New money flowing into Bitcoin via ETFs has pushed the cryptocurrency market cap up 46% in 2024, according to K33. Lunde predicts that the products “could further add to the strength of the broader market” as they allow sidelined capital to enter the market. Additionally, Bitcoin ETF investors “have proven to handle volatility with grace, and flows have been strong even during deep corrections,” Lunde says, suggesting that ETFs can open the market to new, long-term investors.

Finally, the fact that BlackRock, a traditional financial giant, is issuing one of the funds shows that the firm is taking a closer look at cryptocurrencies. It gives the sector a “strong and much-needed stamp of approval,” he says.

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