The debuts occur nearly two years to the day after the ProShares Bitcoin Strategy ETF (ticker BITO), the first Bitcoin-futures ETF, had its US debut to great excitement and a quick accumulation of assets. However, that launch took place when Bitcoin, the biggest virtual currency, traded for more than $60,000. This time around, the competition for supremacy and assets may prove more difficult as cryptocurrency prices wane (Bitcoin is presently trading at approximately $28,000) and investor interest in the formerly burgeoning industry remains almost nonexistent.
“Even if there isn’t a lot of grassroots demand the same way there was for BITO — which we don’t know yet,” said James Seyffart, an analyst at Bloomberg Intelligence, “all of these firms will put a lot of marketing behind these funds.” He mentions the roughly one-fifth open interest in the Ether futures market compared to the Bitcoin futures market. Demand for Ether ETFs might reach $100 million to $200 million if they take just a portion of it.
“I wouldn’t say it will be nothing-burger, but it’s also unlikely to be another BITO,” he remarked.
The Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP), the VanEck Ethereum Strategy ETF (EFUT), and three ProShares funds, including the ProShares Ether Strategy ETF (EETH), were among the entrants on Monday.
Even though Bloomberg News reported in August that the regulator was ready to approve their launch this autumn, the SEC had not—until now—allowed for such funds to trade. Regulators have often been reticent to approve these kinds of cryptocurrency-focused goods. In fact, amid an industry-wide crackdown by authorities, some companies had earlier this year withdrawn their applications for precisely such a device.
Today, issuers are scrambling to release their goods, with some launching flashy marketing efforts to raise money. Ether, the second-largest digital asset, has dropped almost 6% in value over the past two months to trade at around $1,660, indicating that the market has little enthusiasm for it. During that time, Bitcoin likewise fell and is now around $28,000, down roughly 60% from its highs.
“When an Ether-spot ETF debuts, which may occur as early as 2024, investors are more likely to become thrilled. Spot-Bitcoin ETFs would probably take the stage even then, according to Roxanna Islam, associate director of research at VettaFi.
In October 2021, the first Bitcoin futures funds in the US were introduced, and they immediately proved popular. The BITO ETF from ProShares quickly accumulated $1 billion in assets. However, the fund was unable to maintain that velocity, and over time, flows reduced.
Despite being the best-performing equity ETFs this year, crypto-based products have often failed to excite investors. According to data from Bloomberg, the top five performers are all involved with cryptocurrencies. In 2023, they have all increased by more than 80%. But this year, they’ve only managed to bring in a combined $30 million.
Despite the fact that crypto funds may be suffering, Mohit Bajaj, director of ETFs at WallachBeth Capital, says that Ether could see interest once more if prices rise more sharply. After all, many investors prefer Ether over Bitcoin because they see many applications for its blockchain technologies. Regarding the new ETFs, their simplicity of use might be a positive that encourages flows.
“Many people can just buy the ETFs in their brokerage accounts and it adds another avenue to track the performance of Ethereum—in a consolidated platform along with their other investments,” he claimed.