SEC Gives Final Approval for Spot Ethereum ETFs to Begin Trading on July 23

Highlights:

• SEC approves spot Ethereum ETFs; trading starts today.
• Ethereum ETFs are likely to attract lower inflows than Bitcoin.
• ETH price could be sensitive to ETF inflows in the coming days, says Kaiko.

On July 22, the United States Securities and Exchange Commission approved several spot Ethereum (ETH) exchange-traded funds (ETFs), allowing them to begin trading on Tuesday. This follows weeks of back-and-forth on edits to S-1 registration statements.

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The SEC has officially approved the S-1 applications of Ethereum spot ETFs. It is expected that the initial trading will start at 9:30 on July 23. Wintermute predicts that the spot Ethereum ETF will attract up to $4 billion in capital inflows in the next year, and the price of…

— Wu Blockchain (@WuBlockchain) July 23, 2024

The Commission approved S-1 registration forms from BlackRock, Fidelity, Bitwise, VanEck, 21Shares, Franklin Templeton, and Invesco Galaxy. Additionally, the forms for the Grayscale Ethereum Trust and the Grayscale Ethereum Mini Trust went into effect. This approval allows issuers to launch their ETFs on their respective stock exchanges, including Nasdaq, the Chicago Board Options Exchange (CBOE), and the New York Stock Exchange (NYSE).

The SEC first approved 19b-4 applications for the above spot Ethereum ETFs on May 23. However, firms were still waiting for their S-1 filings to be approved to officially start trading. Last week, the SEC informed issuers that they would need to finalize their S-1 documents by July 17 to receive approval for trading to start on July 23.

NYSE Arca has confirmed the listing and trading approval for ETFs from Grayscale and Bitwise. Simultaneously, the Cboe has confirmed that its proposed spot Ethereum ETFs, including those from Franklin Templeton, Invesco, 21Shares, Fidelity Investments, and VanEck, will commence trading on the same day. BlackRock’s ETH ETF will be listed on the Nasdaq.

After the approval of its spot Ether ETF, Jay Jacobs, BlackRock’s US Head of Thematic and Active ETFs, stated:

“Our clients are increasingly interested in gaining exposure to digital assets through exchange-traded products (ETPs) which provide convenient access, liquidity, and transparency. Ethereum’s appeal lies in its decentralised nature and its potential to drive digital transformation in finance and other industries.”

Ethereum Price Will be ‘Sensitive’ to ETF Inflows, Kaiko

A report from Kaiko Research on July 22 indicated that the outlook for ETH’s price following the spot ETF launch is unclear. The firm highlighted that demand was “underwhelming” when futures-based ETH ETFs launched last year.

Kaiko’s head of indices, Will Cai, stated:

“Although a full demand picture may not emerge for several months, ETH price could be sensitive to inflow numbers of the first days.”

Cai noted that one of the most noticeable impacts on the price is expected to stem from potential outflows from Grayscale’s Ethereum Trust. ETHE, like GBTC for Bitcoin, gives institutional investors ETH exposure but has a six-month lock-up. The conversion of ETHE into a spot ETF will make buying and selling easier for traders. As a result, many investors who bought ETHE shares are likely to cash out after the switch on July 23.

The price of ETH has fallen approximately 1.7% in the last 24 hours and is currently trading around $3,400. Analysts from IntoTheBlock have highlighted that Ethereum faces significant resistance near the $3,500 mark.

Bitcoin ETFs Boosted Interest, but Ether ETFs May See Lower Inflows

Spot Bitcoin ETFs drove significant interest in Bitcoin after their launch, but there’s less confidence that Ether ETFs will be as popular. Wintermute expects Ethereum ETFs to attract $3.2 billion to $4 billion in inflows during their first year. Meanwhile, the firm predicts that Bitcoin ETFs will accumulate about $32 billion in assets by the end of this year. Wintermute estimates that first-year inflows into spot Ethereum ETFs will be around 10 to 12% of Bitcoin ETF flows.

Meanwhile, ASXN predicted that ETH ETFs could see monthly inflows of $800 million to $1.2 billion.

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At ASXN, our internal estimates are in the $800M-$1.2 B per month region. This was calculated by taking a market cap weighted average of monthly Bitcoin inflows and scaling this by the market cap of ETH.

Our estimates are backstopped by global crypto ETP data which suggests… pic.twitter.com/IRu6C3R9i6

— ASXN (@asxn_r) July 19, 2024

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