The approval of spot Ethereum exchange-traded funds (ETFs) could potentially lead to their launch on the market by mid-June. Following successful 19b-4 filings for spot Ether ETFs, the next step is to obtain approved S-1 registration statements before trading can begin. Bloomberg ETF analyst James Seyffart predicts that the S-1 approvals could be granted in a “couple of weeks,” possibly leading to a mid-June launch. VanEck has already filed its amended S-1 after receiving approval for the 19b-4 filings, with other applicants expected to follow suit. However, there is a possibility that one of the five SEC Commissioners could challenge the decision within the next 10 days, although digital asset lawyer Joe Carlasare believes this is unlikely.
Market expectations suggest that spot Ether ETFs could attract approximately 20% of the flows that spot Bitcoin ETFs have seen, according to Seyffart. Balchunas offers a more conservative estimate of 10-15%. Since the launch of spot Bitcoin ETFs around four and a half months ago, they have accumulated $13.3 billion in net inflows, indicating the potential for significant inflows for spot Ether ETFs as well. However, concerns have arisen regarding potential outflows from the Grayscale Ethereum Trust if investors shift their holdings to spot Ether ETFs, similar to the outflows seen with the conversion of Grayscale’s Bitcoin investment product.
Regulatory approval for spot Ethereum ETFs was granted to eight applicants on May 23, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise, and Invesco Galaxy. One ETF issuer, Hashdex, did not receive approval on that day. Singapore-based QCP Capital believes 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 also highlighted the significant surge in Bitcoin’s price when spot Bitcoin ETFs were approved in January, indicating the potential for a similar impact on Ethereum.
The process for launching spot Ether ETFs may involve a single round of comments on the S-1 amendments, similar to the feedback provided for spot Bitcoin ETF applicants. This streamlined process could potentially expedite the approval timeline, leading to a mid-June launch as predicted by analysts. However, challenges from SEC Commissioners regarding the approval could delay the launch timeline, although it is currently considered unlikely. Market expectations indicate the potential for significant inflows into spot Ether ETFs, with estimates ranging from 10-20% of the flows seen by spot Bitcoin ETFs since their launch.
Overall, the approval of spot Ethereum ETFs in the United States has generated significant market interest and potential for price increases in Ethereum. While concerns exist regarding potential outflows from existing investment products like the Grayscale Ethereum Trust, market analysts and experts remain optimistic about the impact of spot Ether ETFs on the overall market. With regulatory approval granted to several key financial institutions and asset managers, the launch of spot Ethereum ETFs could mark a significant milestone in the adoption and mainstream acceptance of Ethereum as a valuable asset class.
