Excitement Grows Around Potential Approval of Ether ETFs

by Warren Seah

After the long-awaited introduction of spot bitcoin exchange-traded funds (ETFs) this week, investors are now turning their attention to the possibility of similar ETFs for ether.

On Wednesday, the U.S. Securities and Exchange Commission (SEC) approved 11 spot bitcoin ETFs for the first time. These products had a successful first day of trading on Thursday.

However, bitcoin experienced a 6.8% drop on Friday, resulting in a 3.2% gain over the past week, according to CoinDesk data. In contrast, ether rose by 17.6% over the same period, although it did decline by 1.2% on Friday.

Analysts have suggested that the news about bitcoin ETFs was already factored into the market, leading investors to focus on the potential approval of ether ETFs.

Larry Fink, CEO of BlackRock, the world’s largest asset manager, expressed his belief in the value of an Ether ETF. BlackRock recently launched its iShares bitcoin Trust and filed an application for a spot ether ETF in November.

The path for ether ETF approval remains uncertain, according to Alonso de Gortari, chief economist at Mysten Labs. However, de Gortari believes that once the door is opened for bitcoin ETFs, it becomes easier for other crypto ETF applications like ether. The industry is eagerly awaiting progress in this area, he added.

If bitcoin ETFs generate significant institutional inflows in the coming months, it could establish these products and create a positive precedent for other crypto ETF applications.

Read: Vanguard’s choice to ignore bitcoin ETFs sparks backlash, with some customers moving to crypto-friendly competitors like Fidelity.

Also see: Why the debut of bitcoin ETFs could be concerning for crypto stocks and futures ETFs.

The Rise of Ether: The Next Big Market in Financial Services

The competition in the cryptocurrency world is heating up, and investors are taking notice. While bitcoin ETFs have garnered significant attention, industry experts believe that the focus will soon shift to an ether ETF. According to Paul Brody, EY’s global blockchain leader, the enormous competition and increasing investments in bitcoin ETFs will only serve to boost investors’ interest in an ether ETF.

The Advantages of Ethereum

When it comes to utility and unique advantages, the Ethereum blockchain stands out from the crowd. Fadi Aboualfa, head of research at digital assets custodian Copper, highlighted the superiority of the Ethereum blockchain compared to bitcoin.

The Future of Crypto ETFs

Sandy Kaul, head of digital asset and industry advisory services at Franklin Templeton, predicts the arrival of ETFs that track a basket of cryptocurrencies. Instead of focusing on a single crypto, these diversified products would dominate the market if approved. Kaul drew a parallel to the S&P 500, which encompasses a collection of stocks, emphasizing the need for a diversified approach to crypto investments.

Challenging Road for Ethereum ETF Approval

Despite the optimism surrounding an ether ETF, not everyone shares the same sentiment. Will McDonough, founder and chairman of Corestone Capital, believes that an Ethereum ETF still has a long way to go before gaining approval.

SEC chairman Gary Gensler has previously stated that he views bitcoin as a commodity rather than a security. This distinction has implications for the approval process of various cryptocurrency products.

The SEC has also cracked down on companies offering crypto staking services, where investors can earn yields by locking their coins in secure blockchains like Ethereum. Last year, the SEC shut down Kraken’s staking business in the United States.

One potential scenario is that companies may be allowed to offer an ETH ETF, albeit without the option to stake and earn yield, according to Paul Brody of EY.

As the cryptocurrency market continues to evolve, the arrival of an ether ETF could mark a significant milestone, shaping the future market structure of crypto investments. Despite obstacles and differing opinions, it is clear that Ethereum has emerged as the next big market in financial services.

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