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This week, the cryptocurrency world will see the launch of spot Ether exchange-traded funds (ETFs), which will let investors put their bets on Ether – the second largest cryptocurrency by market capitalization – in the form of stocks.
In May, the Securities and Exchange Commission approved the listing of eight spot Ether ETFs, marking a highly anticipated decision for the crypto industry. These eight spot Ether ETFs will be offered by financial giants, including BlackRock, Ark Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Franklin Templeton, and Invesco/Galaxy Digital.
The Chicago Board Options Exchange has confirmed that there will be five spot Ether ETFs. Nasdaq will host the iShares Ethereum Trust ETF created by BlackRock and the New York Stock Exchange has confirmed two other spot Ether ETFs that will commence trading on Tuesday, July 23rd. These ETFs include:
- BlackRock’s iShares Ethereum Trust ETF (ETHA)
- Grayscale Ethereum Trust (ETHE)
- Grayscale Ethereum Mini Trust (ETH)
- Franklin Ethereum ETF (EZET)
- Bitwise Ethereum ETF (ETHW)
- VanEck Ethereum ETF
- Invesco Galaxy Ethereum ETF (QETH)
- 21Shares Core Ethereum ETF (CETH)
- Fidelity Ethereum Fund (FETH)
These funds have temporary fee waivers designed to attract clients, and after the waivers expire, the management fees range from 0.15% to 2.50%.
Spot Ether ETFs will have a bigger impact than Bitcoin
The launch of the spot Ether ETF follows the SEC’s approval for spot Bitcoin ETFs earlier this year, which pushed Bitcoin to an all-time high. In just a month, the flagship cryptocurrency soared over 50%, lifting the entire crypto market out of a prolonged winter.
Crypto analysts are expecting that Ether will see the same or more rise as Bitcoin after the launch of spot Ether ETFs. Earlier this year, crypto asset trading firm QCP Capital predicted that there could be a potential 60% increase in the price of Ether.
More recently, Matt Hougan, Bitwise’s Chief Investment Officer, predicted that exchange-traded products would have even more impact on Ethereum than they had on Bitcoin. Ether ETF trading will boost Ether’s price, and it may surpass $5,000, he added.
Why Ether is so important
Ether is the native token of the Ethereum blockchain network. The network is home to thousands of decentralized applications and financial services, where investors trade, borrow, and lend via automated software protocols rather than traditional banks or financial institutions.
Ethereum has some unique features that Bitcoin lacks that bolster its usability. For instance, Bitcoin’s blockchain network cannot be used as a platform for decentralized applications because it was not originally designed for applications to be built directly on its base layer.
This is part of the reason why financial giants such as BlackRock and Fidelity are eager to launch Ether funds, as they see Ether ETFs as a means to expand crypto’s investor base. In March, BlackRock launched its first tokenized fund on the Ethereum blockchain. BlackRock has consistently mentioned that its digital asset strategy involves launching ETFs and tokenizing financial assets.
The future of crypto ETFs
The launch of crypto ETFs by financial institutions is a big step in establishing crypto as a legitimate asset class. BlackRock CEO Larry Fink has consistently expressed optimism about Bitcoin, stating that BlackRock’s iShares Bitcoin Trust, or IBIT is the fastest-growing ETF in history and has accumulated assets at an unprecedented pace. Fink is optimistic about Ether ETFs, too. He said earlier this year an ETH ETF is possible even if the SEC treats Ether like a security.
By 2025, cryptocurrency exchange-traded funds (ETF) will form 5% of hedge fund and pension fund portfolios, predicts leading blockchain expert Fiorenzo Manganiello. Manganiello, who also serves as a professor of blockchain technologies at Geneva Business School and co-founder and managing partner of investment firm LIAN Group, believes that regulatory greenlights will soon lead institutional investors, such as hedge funds and pension funds, to view cryptocurrency as a viable asset.
“With BlackRock stepping in and growing its own spot ETF so quickly, it won’t be long until other institutions take the leap and invest in crypto. The Ether ETF approval will only be a catalyst,” he said in an email.