Ethereum Futures ETFs Enter the Market with Limited Trading Activity

The introduction of new Ethereum futures exchange-traded funds (ETFs) has garnered attention, but initial trading volume has been relatively low, with less than $2 million traded.

Nine Ethereum futures ETFs made their debut in the U.S. on Monday after receiving approval from the Securities and Exchange Commission (SEC) over the weekend. Five of these ETFs offer Ethereum-specific futures contracts, including the ProShares Ether Strategy ETF, VanEck Ethereum Strategy, and Bitwise Ethereum Strategy ETF.

The remaining ETFs, such as Valkyrie Bitcoin and Ether Strategy ETF, combine Bitcoin and Ethereum futures products. These firms renamed their futures contracts to offer exposure to Ethereum.

Low Initial Trading Volume

Ethereum futures contracts are financial derivatives that enable investors to speculate on the future price of Ethereum. The performance of the ETFs is tied to the performance of the Ethereum futures contracts they hold.

Volatility Shares, one of the anticipated firms, canceled its plan to launch the futures product. Justin Young, co-founder of the asset management firm, stated that the timing wasn’t right but guaranteed that the product would be available in the future.

Young’s claims about timing could be accurate. Though the debut of these Ethereum futures ETFs has attracted mainstream attention, the first-day trading volume fell short of expectations, totaling less than $2 million.

According to Bloomberg ETF analyst Eric Balchunas, no ETF stood out on the first day. However, Valkyrie’s BTF had the highest trading volume at $882,000.

Balchunas noted that all nine products were “pretty average” and underperformed his predictions. He stated that ETF investors would be more interested in spot ETFs in the long run.

The SEC remains cautious about approving a crypto spot ETF. So far, the agency has rejected all Bitcoin and Ethereum spot ETF applications, citing the high risk of market manipulation and a lack of surveillance-sharing agreements.

Furthermore, the SEC recently extended deadlines for making a decision on the approval of a spot Bitcoin ETF. Crypto futures ETFs appear to face fewer obstacles. Bitcoin futures ETFs have been approved prior to Ethereum futures products.

Grayscale Files for Spot ETF

Grayscale Investments has reportedly filed to convert its Grayscale Ethereum Trust (ETHE) into a spot Ethereum ETF in collaboration with the NYSE Arca Exchange. With this strategic move, Grayscale aims to pave the way for the future approval of a spot crypto ETF featuring Ethereum and Bitcoin, following in the footsteps of other high-profile companies.

Grayscale previously attempted a similar conversion with its Bitcoin Trust to obtain approval for a Bitcoin spot ETF. The initial filing was denied by the SEC, prompting Grayscale to file a lawsuit against the agency. In August, the court ruled in favor of Grayscale, ordering the agency to reevaluate the application.

Grayscale’s Ethereum Trust has emerged as a significant player in the world of cryptocurrency investments, managing an impressive $5 billion in assets. If approved, Grayscale’s Bitcoin Trust will pioneer the launch of the first-ever spot Bitcoin ETF in the United States.

This development could enhance cryptocurrency investment options for both institutional and retail investors.

Speaking to CNBC, Bitwise CIO Matt Hougan and VanEck CEO Jan van Eck expressed their confidence in the SEC’s approval of spot Bitcoin ETFs. Hougan expects the spot product to be available within this year, while Jan van Eck predicts an early launch in 2024.

Meanwhile, most of the crypto community remains optimistic about the eventual approval, especially since major Wall Street players like BlackRock have joined the race. However, some argue that this positive scenario is not guaranteed, particularly given the challenging regulatory landscape in the country.