Ethereum ETFs Finally Start Trading Tomorrow: Here’s What to Expect

Ethereum Exchange-traded funds will finally hit U.S. markets tomorrow after the Securities and Exchange Commission said yes to products in May and signed them for trading today.

THE Bitcoin equivalent has enjoyed resounding success after its launch in January. The funds, which allow investors to buy stocks that track the price of the cryptocurrency, received a lot of attention as traditional investors previously scared off by the complex cryptocurrency space could finally get exposure to an asset on a traditional exchange.

So will traders repeat this rush and flood the new Ethereum funds with cash? Can we expect a ETH price hits record highas some have predicted?

Market experts advise not to worry too much DecryptThings might take some time to sort themselves out.

“I think inflows are going to disappoint for ETH ETFs,” said Greg Magadini, director of derivatives at blockchain data provider Amberdata. DecryptHe noted that demand for Ethereum futures was “low” ahead of launch.

Before the Bitcoin ETF crash, Magadini said, traders were desperate to gain exposure to the asset, and the derivatives market, which allowed people to bet on the future price of an asset, was booming.

That’s simply not the case this time around. “Therefore, demand for ETH exposure is likely to be disappointing relative to BTC,” he added.

James Butterfill, head of research at Jersey-based asset manager CoinShares, pointed out another potential drawback: grayscale.

The leading crypto asset manager will launch two products: a main ETF and a mini. The main will be a conversion of a fund operating as a closed-end product into an ETF. ETFs, by their very nature, are easy to sell.

It’s planned, Butterfill said. Decryptthat investors will want to withdraw their money from the main Grayscale ETF as soon as it launches, which is What exactly happened? when Grayscale converted its Bitcoin trust into an ETF in January, putting downward pressure on the price of the asset.

“It is very likely that the first few weeks will be marred by outflows from the Grayscale ETH product, similar to how the Bitcoin closed-end fund experienced outflows when it became an ETF – investors were ‘locked in’ due to the steep discount to net asset value,” he said.

He added that the approval was positive for the digital asset industry as a whole and could potentially “improve market stability and investor confidence.”

Regarding the mini-fund, Billy Luedtke, CEO and founder of Ethereum-based authentication protocol Intuition, said that the mini-fund could help drive the price of ETH higher.

“THE [mini trust] offers investors an exchange into the new ETFs without tax obligations, providing a more attractive fee structure for those who might be skeptical,” he said. Decrypt“With reduced barriers to entry, increased attractiveness to investors through improved fee structures and tax benefits, and increased awareness, we can likely expect substantial inflows into Ethereum.”

Finally, Patrick Felder, Founder and CIO of Prismatic Capital, said: Decrypt that the market expects flows of around 15-25% of what we see with the Bitcoin ETF.

He added that if inflows are larger than that, “we will see a sharp rise in the price of ETH as market expectations reset.”

Edited by Ryan Ozawa.

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