Ether futures-based exchange-traded funds may increase institutional adoption of crypto, but are not necessarily beneficial to crypto prices in the medium term, according to analysts.
The first ether futures-based exchange-traded funds have debuted in the U.S., as ProShares, VanEck and Bitwise, said they launched such products, respectively, on Monday.
The arrival of ether
ETHUSD,
futures ETFs came roughly two years after the first bitcoin
BTCUSD,
futures ETF, the ProShares Bitcoin Strategy ETF
BITO,
started trading in the U.S. in 2021.
Major cryptocurrencies traded higher on Monday, with bitcoin up 2.9% during the past 24 hours and ether up 0.1%, according to CoinDesk data.
ProShares Ether Strategy ETF EETH traded 2.2% lower Monday afternoon at around $40.66, VanEck Ethereum Strategy ETF EFUT fell 7.1% to around $16.91, and Bitwise Ethereum Strategy ETF AETH declined 2.5% to $25.25, according to MarketWatch data.
“From the BITO experience, the [crypto] futures approach was proven to be very effective,” according to Simeon Hyman, global investment strategist at ProShares.
“We thought it was just a no-brainer” to launch an ether futures ETF, Hyman said in a call. “If we got it for Bitcoin, let’s do it for ether, because they are one and two for the most dominant cryptocurrencies.”
The launch of ether-futures ETFs “is a positive sign for the crypto market overall, for the institutional acceptance of digital assets, and for the likelihood of future spot ETFs being approved,” Greg Moritz, chief operating officer and co-founder at crypto hedge fund Alt Tab Capital, wrote in emailed comments.
The U.S. Securities and Exchange Commission has yet to approve any ETFs that invest directly in bitcoin or ether, arguing that such products are vulnerable to market manipulation. The matter has been under the spotlight especially after a federal appeals court in August ordered the SEC to vacate its rejection of Grayscale’s proposal to convert its Bitcoin Trust product into an ETF, while many analysts said the decision could pave the way for an eventual approval of bitcoin ETFs.
In June, a number of asset managers, such as BlackRock
BLK,
Fidelity, WisdomTree, VanEck and Invesco, filed applications for spot bitcoin ETFs.
The launch of ether-futures ETFs can increase buying pressure on ether sooner than anticipated, according to analysts at K33 Research.
However, analysts at QCP Capital disagreed. Shortly after BITO’s launch, bitcoin reached its all-time high at $68,990 in November 2021, but the crypto kept falling afterward. Bitcoin has risen 70% so far this year but is still down almost 60% from its peak.
“A futures-only ETF is arguably detrimental to spot price – as it potentially directs demand away from the spot market into a synthetic market,” the analysts wrote in a Monday note.
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