Key Takeaways:
The crypto industry has marked another major milestone after the first batch of exchange-traded funds (ETFs) tied to the price of Ether (ETH) made their big debut on Wall Street.
Spot Ether ETFs Generate Over $1 Billion In Trading Volume On First Day
Nine spot Ethereum ETFs from eight issuers, including BlackRock, Fidelity, Bitwise, Franklin Templeton, Grayscale, VanEck, 21Shares, and Invesco began trading on Tuesday. The crypto investment funds generated more than $1.019 billion in cumulative trading volume on day one, per data compiled by The Block Pro Research.
The most traded of the lot was the Grayscale Ethereum Trust ETF (ETHE), which saw a turnover of $456 million, accounting for nearly half the total trading volume. Grayscale’s fund already held over $9 billion worth of Ether before being converted into an ETF.
BlackRock’s iShares Ethereum Trust (ETHA) came in second, contributing to 24% of the trading volume with $245 million, followed by the Fidelity Advantage Ether ETF (FETH), which brought in $137 million, 13% of the total trading volume.
The launch of the spot Ethereum ETFs is another win for the crypto industry’s campaign to push digital assets into the mainstream financial markets. However, the funds’ trading volume fell short of the $4.6 billion raked in the by-the-spot Bitcoin ETFs on their debut in January.
According to Bloomberg ETF analyst James Seyffart, the spot Ether ETF volumes were about 21% of what was seen on the first day of trading for the spot Bitcoin ETFs. The funds backed by BTC attracted $655 million in inflows in their first trading session, compared to spot Ether ETFs, which recorded $140 million in inflows.
Although many market analysts don’t expect the Ether ETFs to attract as much inflow as their Bitcoin counterparts, the funds do represent an important step in the development of the cryptocurrency market.
The ETFs Are Key To The SEC Recognizing Ethereum As A Commodity Rather Than A Security
The introduction of the ETH exchange-traded funds is significant for the industry’s longstanding effort to classify Ethereum as a commodity rather than a security. While the US Securities and Exchange Commission (SEC) has not explicitly designated ETH as a commodity, in the agency’s filing documents, the Ether-backed products are defined as commodity-based trusts.
Cristiano Ventricelli, senior analyst of digital assets at Moody’s Ratings, wrote in a Tuesday report that the spot Ethereum ETFs have helped enhance the cryptocurrency market’s “legitimacy”. He also said the crypto ETFs would help boost the market’s stability while reducing its volatility.
Issuers Are Charging Fees Ranging From 0.19% To 0.25% For The Funds
The fee for the Ether ETFs ranges from 0.19% for Franklin Templeton’s fund to a high of 2.5% charged by Grayscale’s Ethereum trust fund, which is being converted into a full-blown spot market ETF. The remaining funds charge around 0.25% in fees.
Grayscale has launched a “mini” version of its Ether ETF that charges a fee of only 0.15%. The charges are comparable to the Bitcoin-based products. However, unlike with the spot Bitcoin ETFs when issuers decided to waive fees entirely for a certain time, issuers are offering fewer waivers for the Ethereum-focused funds.
As per estimates, the spot Ethereum ETFs are projected to attract monthly inflows in the $1 billion range. Matteo Greco, an analyst at Fineqia International, wrote in an investor note that demand for the Ether ETFs will be crucial in ascertaining investor appetite for digital assets other than Bitcoin.
Since their debut, the 11-spot Bitcoin ETFs have amassed nearly $60 billion in combined market capitalization and $330 billion in cumulative trading volume.
SEC Does Not Allow Staking In The Ether Spot ETFs
Another major concern for some crypto investors is the SEC’s decision to exclude the staking mechanism for the Ether ETFs. Staking is a key feature of the Ethereum blockchain that allows users to lock up their ETH tokens for a certain period in exchange for yield.
However, according to the filings approved by the SEC, the funds will only be allowed to hold regular Ether and not staked tokens.
Despite the hype around the debut of the spot Ether ETFs, the price of Ethereum – the world’s second-largest cryptocurrency after Bitcoin – was trending lower on Tuesday. This also resulted in the value of the ETFs dropping.
At the time of writing, Ether (ETH) is changing hands at $3,432 – down 0.5% in the last 24 hours.
Latest news: Solana Memecoin Popcat’s Price Surges 305% In 30 Days, Hitting ATH of $0.98
