After the SEC made Bitcoin spot ETFs official and they were listed on exchanges, attention is now turning to Ethereum. Ethereum had already been the subject of seven applications for spot ETFs in 2023, with a deadline of 23 May 2024. Exchange-traded funds Bitcoin and Ether appear to have a clear path to approval in 2024.
Eric Balchunas, ETF analyst at Bloomberg, estimates a 70% chance of approval for Ethereum spot ETFs by May.
“The Ether spot is tied to the hip of Bitcoin spot for sure. It’s gonna go wherever it goes. It’s basically like on a 15-foot rope following it.”
Balchunas also noted he had heard “on the back channels” that spot Ether ETFs “will be fine.”
Joe Carlasare, a lawyer specialising in digital assets, also expects them to be approved this year, but with a slightly delayed implementation. He believes the SEC will set a precedent for regulating the market entry of digital asset ETFs.
“Ethereum spot ETFs will be approved [but] the SEC will try to carefully craft a precedent that permits them to retain some discretion in determining which digital asset ETFs will be permitted to come to market.”
“Put another way, I think the SEC is trying to provide guidance that would deter applicants from filing ETFs for every major token,” Carlasare added.
The price of Ether climbed around 3% after these approvals, reaching more than $2,500. This is the first rise since May 2022, with Ether trading at $2,533 at the time of publication, up 7% in the last 24 hours. Spot Ethereum ETFs are not expected to trade until the third quarter of 2024, although Hashdex, one of the candidates, has announced trading as early as the second quarter.
Major market players such as BlackRock, VanEck, ARK 21Shares, Fidelity and Invesco Galaxy, Grayscale and Hashdex are awaiting SEC approval for their spot Ethereum ETFs. The SEC is expected to rule on the various applications between May and July, with a particular focus on spot Ethereum ETFs, whose approval could follow that of spot Bitcoin ETFs, paving the way for further advances in cryptocurrencies.
Expansion of crypto ETFs
The future of ETFs in the cryptocurrency world looks bright, with many possibilities on the horizon. Beyond Bitcoin and Ethereum ETFs, the market could soon welcome new ETFs for other major cryptocurrencies such as Ripple's XRP and Solana's SOL, widening investors' access to a more diverse range of digital assets.
The potential emergence of index ETFs, such as the Crypto 10 Index or the Bitpanda Crypto Index (BCI), offers a fascinating prospect for diversifying investment portfolios in the crypto space. There are also discussions around the creation of ETFs focused on specific industry sectors, such as decentralised finance (DeFi) with the DeFi Pulse Index (DPI) or the Metaverse Index (MVI).
These innovations represent key steps towards the further integration of cryptocurrencies into the traditional financial world, an undeniable sign that we are only at the beginning of an era rich in promise for cryptocurrencies.
