- The crypto industry is expecting Ethereum ETFs to be approved Thursday.
- Investors anticipate a rally like the one following the rollout of Bitcoin ETFs.
- Ethereum ETFs pose new challenges for crypto exchanges.
Institutional investors are ready to pour $500 million into Ethereum ETFs over the next week if they are approved Thursday, according to analysis by OKX, the crypto exchange.
“It’s probably just as, if not more, important as the Bitcoin ETF approval,” Lennix Lai, OKX’s global chief commercial officer, told DL News.
“The potential approval of Ethereum to be traded as a proxy under a traditional framework could bring about the next wave of institutional demand,” Lai said.
Fever pitch
Anticipation is building to a fever pitch after the US Securities and Exchange Commission appeared this week to drop its long-held resistance to approving a spot price exchange traded fund for Ethereum.
Ethereum has soared 24% since Monday and boosted the proof-of-stake sector — Lido Staked Ether, for instance, is up 27% in the last seven days, according to CoinGecko.
Several applicants — such as BlackRock, Invesco Galaxy, Fidelity, and Franklin Templeton— are eagerly awaiting the SEC’s decision.
Asset manager VanEck is, however, first in line to get either a thumbs up or down from the regulator.
While Van Eck’s head of digital assets research said on Wednesday that it expects the SEC to respect the queue, any approval will likely be extended to other applicants to avoid the agency being seen as kingmaker.
Investors expect Ethereum ETFs to follow a similar course to the rollout of Bitcoin funds in January.
Ten such products have been trading at volumes exceeding $1.5 billion since January.
Record rally
The advent of Bitcoin ETFs and Wall Street’s embrace of the asset class spurred a record rally across crypto. This year, the sector’s market value has skyrocketed 50% to $2.7 trillion.
An Ethereum counterpart could excite animal spirits even more. Bernstein analysts’ predicted this week that Ether will surge to $6,600 if the funds are approved.
“Ethereum could potentially surpass its all-time high soon after a potential ETH ETF approval,” Lai said.
| Issuer | Custodian | Next Deadline | Final Deadline | |
|---|---|---|---|---|
| 1 | BlackRock | Coinbase | 08/06/2024 | 07/08/2024 |
| 2 | ARK & 21 Shares | Coinbase | 24/05/2024 | 24/05/2024 |
| 3 | VanEck | Gemini | 23/05/2024 | 23/05/2024 |
| 4 | Fidelity | Self-Custody | 03/06/2024 | 02/08/2024 |
| 5 | Grayscale | Coinbase | 18/06/2024 | 18/06/2024 |
| 6 | Invesco/Galaxy | Coinbase | 05/07/2024 | 05/07/2024 |
| 7 | Hashdex | n/a | 30/05/2024 | 30/05/2024 |
An Ethereum ETF will make it easier and cheaper for retail investors to buy exposure to the second most valuable cryptocurrency.
“Like the Bitcoin ETF before it, an Ethereum ETF will be a significant milestone for the industry,” Jean-Baptiste Graftieaux, CEO of Bitstamp, told DL News.
Cost for exchanges
Yet there may be a cost for crypto exchanges such as Coinbase and Kraken.
ETFs enable traders to access the asset class without using digital wallets or industry-native exchanges. Going mainstream, in other words, has many effects.
Yet Lai downplayed the long-term risk for exchanges and said the ETFs will provide a gateway for newcomers to crypto.
“It may actually expand the overall market size, including volume and participants, meaning it’s complementary rather than cannibalistic,” he said.
Crypto market movers
- Bitcoin is down 1% over the past 24 hours to $69,550.
- Ethereum is up 2.5% to $3,830.