Newly-approved spot Ethereum exchange-traded funds (ETFs) could potentially hit the market by mid-June. The successful 19b-4 filings for spot Ether ETFs allow them to be listed on exchanges, and the next step is to obtain approved S-1 registration statements before trading can commence. Bloomberg ETF analyst James Seyffart predicts that the S-1 approvals could be granted in a “couple of weeks,” with fellow analyst Eric Balchunas suggesting a mid-June launch is possible. Balchunas expects only one round of comments on the S-1 amendments, which could speed up the approval process.
VanEck, one of the applicants, filed its amended S-1 shortly after receiving approval for the 19b-4 filings, with other applicants expected to follow suit. The SEC’s approval was granted by its Division of Trading and Markets unit under delegated authority, with the possibility of a challenge from one of the five SEC Commissioners within the next 10 days. However, digital asset lawyer Joe Carlasare believes a challenge is unlikely, as passing through the trading and markets division indicates no opposition from the Commissioners. Market expectations predict that spot Ether ETFs could attract approximately 20% of the flows that spot Bitcoin ETFs have seen.
There are concerns around potential outflows from the Grayscale Ethereum Trust if investors shift their holdings to spot Ether ETFs, similar to the outflows witnessed with the conversion of Grayscale’s Bitcoin investment product. The Grayscale Ethereum Trust currently holds over $11.3 billion in assets. Regulatory approval was granted to eight applicants on May 23, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise, and Invesco Galaxy. One ETF issuer, Hashdex, did not receive approval on that particular day.
One of the applicants, Singapore-based QCP Capital, believes that the approval of spot Ethereum ETFs in the United States could trigger a substantial rally of up to 60% in the price of ETH. QCP Capital pointed out that when spot Bitcoin ETFs were approved in January, Bitcoin experienced a significant surge in price. Since the launch of spot Bitcoin ETFs approximately four and a half months ago, they have accumulated $13.3 billion in net inflows, according to Farside Investors. Gaining even 20% of that could result in spot Ether ETFs accumulating a combined $2.66 billion in inflows over a similar timeframe.
Overall, the process for the approval of spot Ether ETFs is advancing quickly, with the possibility of trading commencing as early as mid-June. Market expectations predict substantial inflows into spot Ether ETFs, with estimations ranging from 10-20% of the flows seen by spot Bitcoin ETFs. Concerns around potential outflows from the Grayscale Ethereum Trust are being raised, and regulatory approval has been granted to eight applicants. QCP Capital believes that the approval of spot Ethereum ETFs in the United States could lead to a significant price rally for ETH, similar to the surge seen in Bitcoin when spot Bitcoin ETFs were approved.
