ETFs based on Ethereum, recently given the green light, might enter the market around mid-June. After successful 19b-4 filings enabling the listing of spot Ether ETFs on exchanges, the next hurdle is securing approved S-1 registration statements before trading kicks off.
James Seyffart, an ETF analyst at Bloomberg, anticipates that S-1 approvals could come within a “couple of weeks,” though he concedes the process might extend, typically taking up to five months.
Eric Balchunas, another Bloomberg ETF analyst, remains optimistic about a mid-June rollout. He envisions a streamlined process akin to the single round of comments seen with spot Bitcoin ETF applicants, potentially expediting approval.
VanEck Files Amended S-1
VanEck, one of the applicants, wasted no time and promptly filed its amended S-1 after securing approval for the 19b-4 filings. It’s expected that other applicants will follow suit shortly.
Gabriel Shapiro, general counsel at Delphi Labs, notes that the SEC’s approval was granted by its Division of Trading and Markets unit under delegated authority. He suggests that one of the five SEC Commissioners could challenge the decision within the next 10 days.
However, digital asset lawyer Joe Carlasare believes that such a challenge is improbable, as passing it through the trading and markets division signals no opposition from the Commissioners.
In terms of market expectations, Seyffart predicts that spot Ether ETFs could attract roughly 20% of the flows observed by spot Bitcoin ETFs.
Conversely, Balchunas offers a more conservative estimate of 10-15%.
Since the launch of spot Bitcoin ETFs around four and a half months ago, they’ve amassed $13.3 billion in net inflows, according to Farside Investors.
Even capturing 20% of that figure would mean spot Ether ETFs could gather a combined $2.66 billion in inflows over a similar timeframe.
Grayscale Ethereum Trust Could See Outflows
However, concerns have surfaced regarding potential outflows from the Grayscale Ethereum Trust if investors transition their holdings to spot Ether ETFs, echoing the outflows observed with the conversion of Grayscale’s Bitcoin investment product.
The Grayscale Ethereum Trust currently boasts over $11.3 billion in assets, as reported by Arkham Intelligence.
On May 23, regulatory approval was granted to eight applicants, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise, and Invesco Galaxy.
One ETF issuer, Hashdex, did not receive approval on that specific day, standing as the exception.
As noted, Singapore-based QCP Capital suggests that the approval of spot Ethereum ETFs in the United States could potentially trigger a substantial rally of up to 60% in the price of ETH.
QCP Capital highlighted that when spot bitcoin ETFs were approved in January, Bitcoin experienced a significant surge from $42,000 to over $73,000 within a two-week period after the ETFs began trading.
“With Friday implied volatility above 100%, the market is expecting fireworks,” QCP Capital stated.
