The launch of ether futures exchange-traded funds (ETFs) marks a significant expansion in the cryptocurrency market. Ether is already the second most popular cryptocurrency after bitcoin, and the introduction of ETFs focused on ether futures will make it easier for certain types of investors to gain exposure to this part of the crypto market.
While retail traders can already access Ethereum through platforms like Coinbase, financial professionals have lacked avenues to invest in ether. The arrival of these ETFs changes that, allowing financial advisors, family offices, and registered investment advisors to participate in the ether market.
The new ether futures products that launched on Monday include the BitWise Ethereum Strategy ETF (AETH), Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP), ProShares Ether Strategy ETF (EETH), ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE), Bitcoin & Ether Market Cap Weight Strategy ETF (BETH), and VanEck Ethereum Strategy ETF (EFUT).
Bitcoin futures ETFs have already been in existence, with the ProShares Bitcoin Strategy ETF (BITO) leading the market at around $900 million in assets. These ETFs have proven their ability to track the performance of bitcoin and provide investors with exposure to the cryptocurrency market.
The launch of ether futures ETFs may also provide optimism for the approval of spot bitcoin products. The Securities and Exchange Commission (SEC) has historically been cautious about approving spot bitcoin ETFs, but a recent ruling in favor of the Grayscale Bitcoin Trust has challenged the SEC’s reasoning against converting it into an ETF.
Numerous firms, including mainstream money managers like BlackRock and crypto-focused ones like Bitwise, have applications pending for their own bitcoin ETFs. The market is hopeful that the success of ether futures ETFs may pave the way for the approval of spot crypto products in the near future.
The launch of these ETFs coincided with a rally in the prices of both bitcoin and ether. Bitcoin reached its highest level since mid-August, signaling positive market sentiment.
One notable difference among the new ETFs is that VanEck’s ETF is structured as a C-Corp., which will result in different tax treatment. The fund will pay corporate taxes in exchange for lower tax rates on distributions. This tax structure may result in different performance outcomes compared to the other ETFs.
Last week, there was a brief hiccup with the launch of ether futures ETFs when Valkyrie temporarily paused and reversed its plan to convert its Bitcoin Strategy ETF (BTF) into a product that held both ether and bitcoin strategies. However, Valkyrie has stated that the change will proceed as planned by Tuesday.
In addition to the ether futures ETFs, Grayscale, a leading digital asset management firm, has filed an application to convert its Ethereum Trust into an ETF. This move further reflects the growing interest in expanding the range of crypto-related investment products.
Overall, the launch of ether futures ETFs is a significant development in the cryptocurrency market. It opens up new opportunities for institutional and retail investors to gain exposure to ether and potentially paves the way for the approval of spot bitcoin ETFs. With the growing interest in cryptocurrencies, the ETF market is evolving to cater to the demand for crypto-related investment products.
