SEC Gives Consent for Spot Ether ETFs to Begin Trading Today
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The United States Securities and Exchange Commission (SEC) approved spot Ether ETFs for trading on July 22. Trading of the ETFs will start on July 23 across stock exchanges including the Nasdaq, the New York Stock Exchange (NYSE), and the Chicago Board Options Exchange.
The Significance of the Approval
The successful spot Ether ETF issuers include BlackRock, Fidelity, 21Shares, Bitwise, Franklin Templeton, VanEck, and Invesco Galaxy.
They will offer a base fee between 0.15% and 0.25%, although Fidelity, 21Shares, Bitwise, Franklin, and VanEck will not charge fees on their ETFs for a given time or until their offered products reach a required threshold in net assets under management.
Notably, the approval of the final S-1 filings by the US SEC came about two months after the approval of the 19b-4 filings on May 23.
According to crypto analysts, the approval of the spot Ethereum ETFs highlights a significant milestone for the crypto industry and the democratization of finance and technology.
It also proves that the crypto market is developing and garnering support for regulation, which is essential for long-term growth.
SEC has officially approved the trading of Spot #EthereumETFs for tomorrow, July 23rd! 🇺🇸
Welcome to trade $ETH at https://t.co/d7pMKAzJnx 🚀 pic.twitter.com/irHgCqPIKw
— Poloniex Exchange (@Poloniex) July 23, 2024
Meanwhile, it is expected that the approved trading will serve as a positive response for the market, with Ethereum predicted to recover around this period with more flows, given that the transaction volume on the ETH L1 blockchain has slowed down as the activity has shifted to L2s and other chains such as Solana.
The introduction of Bitcoin and Ethereum ETFs has set the pace for the emergence of other crypto exchange-traded products with a Solana-based ETF, a remote possibility.
The growing interest in crypto ETFs has also changed investors’ perception of only seeing the assets as one for speculative purposes. Now, investors are beginning to make them an important part of their portfolio, and the participation of financial institutions also adds to its credibility.
The Impact of the Spot Ether ETF Trading on the Price of Ethereum
There has been a range of predictions on the potential impact of spot Ethereum ETF by industry experts.
Bitwise’s Matt Hougan gave a bullish prediction as he is optimistic that ETH prices will reach $5,000 by the end of 2024. He bases this on Ethereum’s near-zero inflation rate and the significant amount of ETH locked in staking and DeFi protocols, which could amplify the effect of ETF inflows.
Bitwise CIO, Matt Hougan forecasts Ethereum price could top $5,000 post introduction of Ethereum ETFs. He predicts $15bn inflow into ETH ETFs in the first 18 months. 28% of all ETH is staked, reducing market supply. #Ethereum #ETFs #Bitwise
— Sharpe Signals (@SharpeSignals) July 17, 2024
However, ETF analysts like James Seyffart predict that the demand for spot Ether ETFs will only be 20% that of the spot Bitcoin ETFs simply because the market capitalization of Ether is about one-third of the size of Bitcoin.
⚡️ Bloomberg ETF analyst James Seyffart predicts demand for spot #Ethereum ETFs could hit 20%-25% of spot #Bitcoin ETF demand, given Ethereum's market size is about 30% of Bitcoin's.
Limitations include the inability to stake and use on-chain utility.
— Satoshi Club (@esatoshiclub) May 25, 2024
At press time, Ethereum trades at $3,491.