Ether (ETH) prices rallied close to $1,750 early on Monday, October 2, following the launch of nine Ethereum futures exchange-traded funds (ETFs) on the Chicago Board Options Exchange (CBOE). The event marked the first time Ethereum-based investment products for the futures market have been made available in the United States.
A futures contract is an agreement to buy or sell an asset, in this case, Ether, on a later date at a predetermined price.
However, the much-hyped exchange-traded products failed to come anywhere close to the demand that was received by the first Bitcoin ETF for the U.S. futures market – ProShares Bitcoin Strategy ETF (BITO) – when it began trading in October 2021.
ProShares, VanEck, Bitwise, And Valkyrie Has Begun Trading Of ETH Futures ETFs
ProShares, VanEck, Bitwise, Valkyrie, Kelly, and Volshares were among the investment firms that debuted Ether futures ETFs on the CBOE. Out of these funds, only five exclusively held ETH futures contracts, while the remaining jointly track Bitcoin and Ether futures derivatives.
ProShares launched three funds: the Bitcoin and Ether Market Cap Strategy ETF and the Bitcoin and Ether Equal Weight Strategy ETF (BETE) which contain both Ether and Bitcoin futures contracts, while the ProShares Ether Strategy Fund (EETH) purely tracks derivatives tied to futures contracts. All three funds are listed on the New York Stock Exchange (NSE).
The Bitcoin and Ether Equal Weight Strategy ETF has equal exposure to both BTC and ETH futures, while the Bitcoin and Ether Market Cap Weight Strategy ETF splits the exposure to both digital assets based on their live market capitalization.
Bitwise also released two funds; the Bitwise Ethereum Strategy ETF (AETH) which will only have Etheruem futures, and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) which contains a 50-50 split of ETH and BTC-tied futures contracts.
VanEck’s Ethereum Strategy ETF (EFUT) and Valkyrie’s Bitcoin and Ether Strategy ETF (BTF) also made their debuts on Monday. However, Valkyrie was expected to change the strategy of its fund last week, which has since been delayed due to a regulatory issue related to the Securities and Exchange Commission (SEC). Brazilian fund manager Hasdex also listed its Ether Strategy ETF (EX) on October 2.
Ether Futures ETFs Traded Below The Market’s Expectations
Despite the excitement surrounding the launches, the funds did not perform as expected. Bloomberg’s senior ETF analyst Eric Balchunas took to X (formerly Twitter) to declare that there was no clear winner out of the nine listings as all of them performed “pretty average” and lower than his expectations. Balchunas also noted that ETF investors would prefer physical funds over derivatives held in futures markets.
The funds traded for less than $2 million in total, which led to the financial analyst describing the volume as “meh”.
The Ether futures ETFs have seen a decline in value and limited trading volume activity since Monday, with VanEck Ethereum Strategy ETF (EFUT) down 6%, Bitwise Ethereum Strategy ETF (AETH) down 4%, and ProShares Ether Strategy ETH trading 3.7% lower than the price of ETH. Valkyrie’s BTF was the one that saw the most trades with $787,000 worth of shares changing hands.
When compared to Ether futures ETFs, the first-ever Bitcoin-focused futures ETF traded nearly $1 billion in shares on its debut back in 2021. But the ProShares Bitcoin Strategy ETF was launched at the peak of the bull run when Bitcoin was priced at around $65,000.
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SEC Planned The Launch Of All Funds On The Same Day To Stop Market Domination
One thing worth noting is that the products were not a total failure. Balchunas said the trade volume for Ether futures ETFs was “quite a lot” compared to regular traditional finance ETF launches. He also explained that the SEC would have scheduled the launch of all the ETPs on the same day to prevent the chance of one fund dominating the market.
Meanwhile, crypto asset manager Grayscale has filed an application with the SEC to convert its Ethereum Trust (ETHE) into a spot Ethereum ETF. Last month, the company also filed for an Ethereum futures ETF listing that will be backed by cash-settled futures contracts rather than actual Ether.
Prominent traditional finance players from Wall Street like BlackRock and Fidelity have recently filed applications to list Bitcoin-focused ETFs for the U.S. spot markets. Currently, there are nine spot BTC ETFs awaiting the SEC’s approval. The financial regulator is continuing to delay the products’ listing, citing various reasons. This has led to members of the House Financial Services Committee of the U.S. Congress getting involved in the matter, ordering the Commission to approve the ETFs “immediately”.
At the time of writing, Ethereum (ETH) is trading at $1,643 – down 1.3% from the previous day’s price.
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