In a major turn of events, the US Securities and Exchanges Commission (SEC) has approved the Spot Ethereum ETFs. They will start trading today, July 23, 2024, after the SEC’s approval is finalized.
The following ETFs have finalized their prospectuses and will start trading today.
- 21Shares Core Ethereum ETF (CETH)
- Bitwise Ethereum ETF (ETHW)
- Fidelity Ethereum Fund (FETH)
- Franklin Ethereum Trust (EZET)
- Invesco Galaxy Ethereum ETF (QETH)
- iShares Ethereum Trust ETF (ETHA)
- VanEck Ethereum ETF (ETHV)
Spot Ethereum ETFs are thought to boost the price of ETH, with the token expected to garner assets worth $15 million in the next 18 months.
Ethereum ETFs will be successful like the spot Bitcoin ETFs, which were released earlier this year, and will collect 20%-25% of the profit that the Bitcoin ETF gained in its early period.
The move will make ETH a popular investment option among traditional investors as they can invest in stocks based on ETH without buying the coins.
Impact of Spot ETFs on the Price of Ethereum
The current price of ETH tokens is $3,459.21. The various market analysts think that the price will rise to $5,000 after the launch of the spot ETF.
Their prediction is based on the surge in the price of Bitcoin after its spot ETF was launched in January. Bitcoin’s price surged by about 58% within two months of its ETF launch.
Even though Ethereum will not gain as much profit as Bitcoin, it is still expected to make new assets worth $15 million to $20 million in the first one and a half years of the ETF launch.
That means even though the price surge will not be reflected immediately in the market, the long-term prospects of the spot Ethereum ETFs are worth considering when making investment decisions.
How Does a Spot Cryptocurrency ETF Work?
Spot ETFs are the most effective way to escape the general price volatility of cryptocurrencies. Rather than owing the cryptocurrency, spot ETF holders hold the stocks issued by the ETF provider on the current price of the underlying asset, which in this case is Ethereum.
The companies that issue spot ETFs buy ETH tokens in large quantities and store them safely in various cold wallets. Stocks are issued for these coins which the investors can buy.
The price of the stock is dependent on the real-time market price of Ethereum. Investors can have their stake in a prominent crypto coin without buying the coin and bearing the risks associated with it.
Spot ETFs are more reliable and authentic than futures ETFs because the price is real and is not based on speculations.
Benefits of Spot Cryptocurrency ETFs
Spot cryptocurrency ETFs are beneficial to investors in many ways.
- Spot ETFs allow investors to have a stake in a particular cryptocurrency without actually buying or staking the cryptocurrency. This saves them from many additional costs such as maintaining a cryptocurrency wallet and paying the gas fees on the exchange. Spot ETFs work under a nominal fee.
- Spot ETFs fall under the regulatory eye of various agencies such as the US Securities and Exchanges Commission (SEC). This is important as the investor’s interests and security will be largely protected as opposed to direct investments in decentralized cryptocurrencies.
- As spot ETFs are regulated, it is easy for investors to plan matters such as tax payments and other matters related to portfolio management. Cryptocurrencies are a new addition to the market and therefore do not have definite rules based on which taxation decisions are taken.
The Bottom Line
Spot Ethereum ETFs are investments with a high potential for providing profit to investors. If the market conditions flourish as expected, Spot Ethereum ETFs will give good gains to their investors following the success of Spot Bitcoin ETFs.
ETH coins will continue to be one of the most valued cryptocurrencies with high-profit potential. The investor’s confidence in the general cryptocurrency market will be boosted and more people will be attracted to the market with the success of the ETH tokens.
The liquidity of ETH tokens will be maintained on the market with the regular buying and selling of the tokens.
