Ethereum Futures ETFs’ Muted Debut Contrasts With Bitcoin Counterpart

Key Insights:

• Ethereum futures ETFs debut with a subdued $2 million volume, dwarfed by BITO’s inaugural $200 million.
• Valkyrie’s BTF shines among the new ETFs, leveraging its Bitcoin-Ether blend advantage.
• The crypto sphere eagerly eyes SEC’s pending decisions on spot Bitcoin and Ether ETFs.

The cryptocurrency world braced for a potentially monumental moment by introducing the Ethereum futures ETFs. However, the market’s initial reaction was somewhat restrained. Launched on October 2, these innovative products are meticulously crafted to reflect futures contracts associated with Ethereum. But as the trading day progressed, volumes barely scratched the $2 million surface. For perspective, BITO, the inaugural Bitcoin futures ETF, soared to a remarkable $200 million in its first 15 minutes.

Drawing Comparisons

Drawing direct comparisons between BITO and the Ethereum futures ETFs might need to be more accurate. It’s paramount to remember that BITO’s record-setting debut coincided with Bitcoin’s October 2021 bull run. During that period, it amassed a staggering $1 billion on its first trading day. Hence, while the numbers for Ethereum futures ETFs may seem modest in isolation, there’s a broader canvas to consider.

Of the nine Ethereum ETFs unveiled, a majority (five) exclusively shadow Ether futures. In a slightly more complex structure, the remaining four keep tabs on Bitcoin and Ether futures contracts.

Eric Balchunas, a seasoned Bloomberg analyst, shared his insights on the launch. While he felt the numbers were “pretty meh,” it’s crucial to understand this sentiment in a broader spectrum. In traditional finance, such volumes for a freshly minted ETF are standard. Additionally, he shed light on the investor’s psyche. Typically, spot ETFs have garnered more attention than their futures counterparts.

Unprecedented day today with multiple ETFs all launching at same time. No clear winner has emerged, all of them were pretty average, lower than I would have predicted, but its a long run and remember, these hold futures (ETF investors much prefer physical to derivatives) https://t.co/fKGOv8T7pP

— Eric Balchunas (@EricBalchunas) October 2, 2023

Moreover, Balchunas pointed out the SEC’s strategic maneuver in this launch. By rolling out all ETFs on the same day, the intent was clear: prevent any single fund from monopolizing the market.

Spotlight on Specifics

Valkyrie’s BTF emerged as the most sought-after product among the new entrants, registering an impressive $882,000 in volume. This fund, which uniquely blends Bitcoin and Ether, wasn’t starting from scratch. It previously existed as a Bitcoin-only futures ETF. Following regulatory approval, its evolution into a dual investment tool seemed to provide it an advantage.

Meanwhile, VanEck’s Ethereum Strategy ETF (EFUT) saw a transaction of about 25,000 shares, each priced at around $17. This culminated in a total volume close to $425,000.

The Road Ahead

The crypto fraternity remains on its toes, keenly awaiting the SEC’s pronouncements on Bitcoin and Ether ETFs. Speculations and predictions are rife. Matt Hougan of Bitwise is optimistic, anticipating a spot Bitcoin ETF to grace the market by the year’s close. Echoing this sentiment, Jan van Eck of VanEck forecasts a spot product’s advent by early 2024.

Consequently, while the Ethereum futures ETF launch might not have mirrored the meteoric rise some stakeholders envisaged, it’s merely a chapter in the ongoing crypto ETF saga. As regulatory stances mature and market dynamics shift, the terrain is bound to evolve.