Ethereum exchange-traded funds (ETFs) launched this week disappointed speculators with a slow start. The funds, including the ProShares Ether Strategy ETF, accumulated a total trading volume of $1.92 million. Analysts suggest a pattern similar to Bitcoin’s initial rise and fall, indicating a potential scenario for Ethereum.
The crypto community’s eyes have focused on the performance of the long-awaited Ethereum futures exchange-traded funds (ETFs) that launched this week.
However, analysts have given explanations as to why the initial week fell short of expectations in terms of price and value.
Lack of Significant Attraction for Ethereum Futures ETFs
This week’s debut of several Ethereum futures ETFs has left many speculators who had been eagerly anticipating it disappointed for over a year. Nine Ethereum futures ETFs were introduced to the market this week. They were launched by investment companies ProShares, VanEck, Bitwise, Valkyrie, Kelly and Volshares.
On October 2, Bloomberg analyst Eric Balchunas shared the information through his official account on X (Twitter):
“Pretty mediocre volume for Ethereum futures ETFs as a group, just under $2 million, about normal for a new ETF, but compared to $BITO it is low”.
However, upon launching on October 2, the ETFs attracted just under $2 million in flows, according to a recent report. Anticipating an increase, the price of Ethereum rose by approximately 4.5% to reach $1,734 the day before the launch on October 1, which ended on October 2 at $1,659, though, being a 4% drop.
At present, the price of Ethereum is $1,643. As of October 2, the six funds accumulated a total trading volume of $1.92 million. However, the largest of them, the ProShares Ether Strategy ETF, contributed significantly with a trading volume of $878,560, representing 45.7% of the total volume.
This presents a notable difference compared to the rapid achievement of $1 billion in flows in just two days for the ProShares Bitcoin Strategy ETF (BITO) upon its launch in 2021. However, the broader crypto market was in a solid phase during that time.
Meanwhile, an X (formerly Twitter) user highlighted that it represented only 0.2% of trading volume compared to the initial day of Bitcoin futures trading. However, there is no need to be alarmed. According to Bloomberg Senior ETF Analyst Eric Balchunas, this has happened before:
“Any cryptocurrency-related launch tends to be a ‘buy the rumor, sell the news’ event,” Balchunas noted.
Fate Awaits Ethereum Spot ETFs
Balchunas also noted a decline in the price of Bitcoin following the initial surge in demand for BITO. It suggests a similar potential scenario for Ethereum price:
“If you look at BITO, Bitcoin fell a lot after that […] I wouldn’t be surprised if this happened with futures ETFs either.”
Meanwhile, the SEC recently announced that it would delay its approval decisions for Ethereum spot ETFs. An announcement won’t be made until at least late 2023.
According to two separate filings, the SEC has postponed the outcome of both the ARK 21Shares Ethereum ETF and the VanEck Ethereum ETF. Both companies filed applications for the Ethereum spot ETF on September 6. If granted approval, these would be the first ETFs to provide direct exposure to Ethereum within the US.
On October 2, Grayscale joined the list of investment firms that applied for an Ethereum spot ETF. In a filing, the New York Stock Exchange (NYSE) made the request to the SEC. The filing requests permission to convert the Grayscale Ethereum Trust (ETHE) into an Ethereum spot ETF
By Leonardo Pérez
