Ethereum Futures ETFs Falter Following Launch, Sparking Concerns For Bulls

  • Ethereum futures ETF got off to a poor start, recording less than $3 million in trading volume on first-day trading.
  • The paltry figures starkly contrast with the impressive figures notched by Bitcoin futures back in 2021.
  • Nine ETF products were launched on the same day, with the SEC keen on preventing market domination.

After months of building anticipation, the Ethereum (ETH) futures exchange-traded fund (ETF) recorded less than stellar results after the first day of trading.

After months of regulatory horse-trading, the US Securities and Exchange Commission (SEC) approved nine ETFs to track futures contracts linked to ETH. However, initial enthusiasm waned after the combination of the nine ETFs failed to garner up to $3 million on the first day of trading.

“Unprecedented day today with multiple ETFs all launching at the same time,” said Bloomberg analyst Eric Balchunas. “No clear winner has emerged, all of them were pretty average, lower than I would have predicted.”

Despite the lacklustre figures, optimism still runs high, with a cross-section believing that the ETFs could go on to record impressive figures in the coming weeks. Balchunas noted that it would take a while for investors to warm up to ETF tracking the futures contracts tied to ETH citing the preference of investors to hold physical products over derivatives.

Among the lot, Valkyrie’s Bitcoin Strategy ETF recorded the most activity, with just over $800,000 in volume. Valkyrie’s ETF, originally tracking BTC futures, tweaked its setup to include ETH as it leveraged its soaring popularity.

Four out of the nine ETFs track only ETH futures, while the rest operate by tracking a mixture of the futures of two of the largest virtual currencies – BTC and ETH.

Apart from investors’ preference for physical assets, pundits have warned that futures ETFs negatively affect spot markets as virtual currency assets took a hit in the hours following the lunch. Bitcoin (BTC) and ETH experienced minor declines in the hours following the launch as the global market capitalization shrunk by nearly 4%.

“We would even go further to say a futures-only ETF is arguably detrimental to spot prices – as it potentially directs demand away from the spot market into synthetic markets,” said one analyst.

After the SEC approved the launch of Bitcoin futures ETFs in October 2021, trading volumes went through the roof. At the time, the ProShares Bitcoin Strategy ETF recorded a staggering $1 billion in volume, with close competitors racking up similar figures amid the push for a spot ETF.

The impressive ETF volumes propelled BTC to new highs of over $60K, laying the foundation for a new class of institutional interest in the asset. At the moment, investors continue to scan the horizon for an uptick in activity for the new ETH futures ETFs while key players continue to slug it out with the SEC for a BTC spot ETF.

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