In a significant milestone for the cryptocurrency industry, U.S. exchange-traded funds (ETFs) tied to the price of ether enjoyed a robust debut, with trading volumes surpassing $1 billion on their first day. Data from Bloomberg and CF Benchmarks indicate that investors traded approximately $1.07 billion worth of shares in these newly launched ether ETFs, underscoring the market's enthusiasm and the growing acceptance of digital assets.
Grayscale's Ethereum Trust (ETHE) emerged as the frontrunner, commanding nearly $458 million in trading volume. BlackRock's iShares Ethereum Trust (ETHA) also saw substantial activity, with $243 million in trades. Fidelity's Advantage Ether ETF (FETH) recorded $137 million in trading volume, while the remaining six funds, including those from Franklin Templeton, VanEck, Bitwise, 21Shares, and Invesco, saw less than $100 million each.
Despite the impressive figures, the debut of the ether ETFs fell short of the $4.5 billion trading volume achieved by the spot bitcoin ETFs on their launch day in January. Analysts noted that the lower volumes could be attributed to various factors, including market conditions and investor sentiment. "Although ether ETFs may not attract as much inflow as bitcoin ETFs, they represent an important step in the development of the cryptocurrency market," said Grzegorz Drozdz, a market analyst at Conotoxia Ltd.
The launch of these ether ETFs is a notable victory for the cryptocurrency industry, which has long sought to integrate digital assets into mainstream financial markets. The SEC's approval of these products marks a significant shift in regulatory stance, reflecting growing acceptance of cryptocurrencies as legitimate investment vehicles. Cristiano Ventricelli, a senior analyst of digital assets at Moody's Ratings, highlighted the significance, stating that the debut enhances the cryptocurrency market's "legitimacy" and could help stabilize the market.
Ether, the world's second-largest cryptocurrency after bitcoin, experienced a slight decline on Tuesday, impacting the prices of the new ETFs. According to CoinGecko, ether was trading flat at $3,486.75 after the market closed. Market participants are keenly observing the impact of these ETFs on ether's price dynamics and the broader digital asset market.
The introduction of ether ETFs is also significant for the industry's efforts to classify ether as a commodity rather than a security. While the SEC has not explicitly labeled ether as a commodity, the filing documents for these new products define them as commodity-based trusts. This distinction is crucial for the regulatory framework governing these assets and could pave the way for further financial innovation in the sector.
The launch of the ether ETFs follows a decade-long struggle with the SEC, which had previously rejected similar products due to concerns over market manipulation. The breakthrough came after the SEC lost a court challenge brought by Grayscale Investments, prompting the agency to approve the bitcoin ETFs earlier this year. The bitcoin ETF launches were among the most successful in the ETF market's history, attracting $33.1 billion in net inflows by June, according to Morningstar Direct data.
Fee structures for the ether ETFs vary, with Franklin Templeton offering the lowest fee at 0.19% and Grayscale's ether trust, which is converting into an ETF, charging as much as 2.5%. Most other funds have fees around 0.25%. Grayscale has also introduced a "mini" version of its ether ETF with a fee of only 0.15%.
Projections for demand for the ether ETFs vary widely. Galaxy Research, whose sister company Galaxy Asset Management has a pending ether ETF with Invesco, estimates monthly inflows could reach $1 billion. Matteo Greco, a research analyst at Fineqia International, emphasized that demand for these products will be crucial in determining investor appetite for digital assets beyond bitcoin.
