In an expected decision, the U.S. Securities and Exchange Commission (SEC) has granted final approval for spot exchange-traded funds (ETFs) that hold Ethereum’s ether (ETH). This move allows American investors to access the second-largest cryptocurrency through a regulated and easily tradable vehicle, marking a significant milestone in the crypto market.
Long-Awaited Approval
The approval of Ethereum ETFs caps a lengthy process that mirrors the journey of Bitcoin ETFs, which were approved by the SEC in January. The introduction of ether ETFs is expected to attract a new wave of investors who prefer the traditional brokerage channels. Since their launch, Bitcoin ETFs have amassed tens of billions of dollars in investments, indicating strong market demand.
Regulatory Engagement
Until recently, the approval of ether ETFs seemed uncertain. However, a turning point came in late May when SEC officials began actively engaging with potential ETF issuers. The pivotal moment occurred on May 23, when the SEC approved a crucial filing, setting the stage for the final approval announced today.
Market Impact and Predictions
The approval and imminent trading of Ethereum ETFs draw comparisons to the spot Bitcoin ETFs, which experienced a record-breaking launch. Bitcoin’s price surged to new all-time highs, rising over 58% within two months of the ETF approval. Some analysts predict a similar, though possibly less dramatic, impact on Ethereum’s price. Estimates suggest ether could reach up to $6,500, though inflows might not match the fervor seen with Bitcoin ETFs.
Forecasted Inflows
Steno Research forecasts that the newly launched Ethereum ETFs could attract $15 billion to $20 billion in the first year. While this is a substantial amount, it is comparable to the inflows Bitcoin ETFs achieved in just seven months. The lack of a “first-mover advantage” and a compelling narrative akin to Bitcoin’s “digital gold” might temper the enthusiasm for ether ETFs.
