Spot ETH ETF Products Launch Today After SEC Approval But May Face Underwhelming Demand

Updated: 23 July 2024

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Demand for spot ETH ETF (exchange-traded fund) investment vehicles might underwhelm after they received final approval from the US Securities and Exchange Commission (SEC) to start trading today.

Prominent market maker Wintermute forecasts that Ethereum-based investment products will collect $4 billion at most from investors over the next year. That is far less than the $17 billion that spot Bitcoin ETFs have already raked in since their debut at the start of the year.

Research frim Kaiko echoes that sentiment, basing its prediction on the underwhelming demand for futures-based ETH ETFs when they launched in the US last year.

ETH ETF Launches Could Spur A 24% Gain In The Ethereum Price In 12 Months

Spot ETH ETF issuers received on July 22 the final approval needed from the SEC for their respective products to start trading today. Fidelity, VanEck, BlackRock, Grayscale, Franklin Templeton, Bitwise, 21Shares and Invesco all plan to launch spot ETH ETFs today.

Despite Wintermute’s prediction that the debut of ETH ETFs will be met with low demand, the market maker said inflows into the products could lead to ETH’s price gaining as much as 24% over the course of the next 12 months.

Investors Might Prefer Holding ETH Directly

Investors might also opt to hold ETH directly over investing in Ethereum ETFs since the investment products will not be allowed to stake their holdings.

This could have led to extra income for investors. Regulators denying issuers’ requests to allow staking has subsequently reduced “the competitiveness of ETH ETFs compared to direct holdings,” said Wintermute.

Our latest Data Debrief is out now.

We looked at $ETH expectations ahead of the launch of spot ETFs in the US. Check it out for insight on how the market is positioned and where it might go.https://t.co/Cl4oPNFeRG

— Kaiko (@KaikoData) July 22, 2024

If last year’s launch of futures based ETH ETFs in the US is any indication, then Kaiko believes spot ETH ETFs might take some time to gain traction in the market.

Kaiko’s head of research, Will Cai, said in a July 22 report that a “full demand picture may not emerge for several months.” Cai added that the “ETH price could be sensitive to inflow numbers of the first days.”