Ethereum ETFs Launch: Experts Weigh In on Potential Market Impact

Ethereum May Be Headed For A Sell-Off After ETFs Launched: 10x Research

Despite potential short-term volatility, Ethereum's long-term prospects remain promising with anticipated investments and market growth. A new 10x Research report suggests investors approach Ethereum ETH/USD with caution, suggesting the ETF launch might trigger a sell-off rather than a sustained rally. What Happened: Despite the initial excitement, 10x Research research points out that historical patterns suggest a potential market correction following such launches. They note that similar events, from the Bitcoin futures launch in December 2017 to the recent Bitcoin spot ETF debut, have typically led to price corrections shortly after. The report highlights several factors that could dampen enthusiasm for Ethereum ETFs: Limited marketing efforts by ETF issuers, potentially resulting in lower retail and institutional interest. A relatively low annualized funding rate for Ether futures (7-9%), which may not attract significant arbitrage flows from institutions. Ethereum's staking yield of just 3.12%, which is less attractive in the current high-interest-rate environment. Stagnant growth in Ethereum network activity, with user numbers similar to those from three years ago. Technically, the analysts suggest that Ethereum's price, currently trading around $3,500, might be overbought according to the stochastics indicator. Also Read: EXCLUSIVE: How AI Can Unlock The True Potential Of Web3 They propose a stop-loss at $3,560 for any short positions. Interestingly, the report also touches on the growing narrative that this cycle might favor Solana over Ethereum, citing higher active user numbers for Solana SOL/USD (14.2 million vs. Ethereum's 7.5 million). For investors looking to capitalize on these market dynamics, 10x Research suggests considering a long Bitcoin vs. short Ether strategy, or using options to sell ETH calls and buy Bitcoin calls. The approval of Ethereum ETFs, which came after the Securities and Exchange Commission (SEC) gave the green light to exchange applications in May, has been highly anticipated in the crypto community. This development follows the successful launch of Bitcoin spot ETFs in January, which have accumulated over $54 billion in assets under management. What's Next: As the crypto landscape continues to evolve rapidly with these institutional-grade investment vehicles, industry professionals and enthusiasts alike will be eager to discuss the implications at the upcoming Benzinga Future of Digital Assets event on Nov. 19. Read Next: Michelle Obama For Democratic Nominee? Crypto Bettors Think Her Odds Have Just Tripled Image: Shutterstock Market News and Data brought to you by Benzinga APIs

Ethereum ETFs Are Live: Here's How Experts Assess Their Launch

The full impact of ETH ETFs may take 6-9 months to materialize as financial institutions integrate them into portfolios. Nine spot Ethereum ETFs began trading on US exchanges Tuesday, marking another milestone in the mainstream adoption of digital assets. What Happened: This launch comes just six months after the debut of spot Bitcoin ETFs in the United States, which have already accumulated over $54 billion in assets under management. The new ETH ETFs, offered by major financial players including BlackRock BLK, Fidelity, Grayscale, and others, are now available on the Cboe CBOE, NYSE Arca, and Nasdaq exchanges. Grayscale's Ethereum Mini Trust stands out with the lowest fee of 0.15% and is set to start with approximately $1 billion in assets. In the early hours of trading, the newly launched Ethereum ETH/USD ETFs demonstrated significant market interest. According to data from Yahoo Finance, analyzed by The Block Pro Research, these funds collectively amassed $205 million in trading volume within the first 60 minutes. The momentum continued, with the total volume reaching $300 million approximately 75 minutes after the market opened, at around 10:45 a.m. EST. To put these figures into perspective, Bloomberg's Senior ETF Analyst Eric Balchunas offered his insights on the initial trading performance. "Here's volume after first 15 minutes of trading. Total of $112m traded for the group (which is A TON vs a normal ETF launch but only about half of what bitcoin ETFs' volume pace was on DAY ONE, altho 50% would exceed expectations IMO)," he said. He added that the comparison excluded GBTC and if it was included the ETH ETFs do about 20% to 25% of the volume of the BTC ETFs. "Regardless, very solid showing," he said. Also Read: EXCLUSIVE: How AI Can Unlock The True Potential Of Web3 What Others Said: Nathan McCauley, CEO of Anchorage Digital, hailed the launch as "a major step forward in regulatory clarity for the digital asset class." He emphasized that the ETF wrapper will provide a new pathway for safe and compliant exposure to Ethereum, potentially driving billions in inflows from both institutions and consumers. Konstantin Shulga, CEO and co-founder of Finery Markets, noted the accelerated adoption rate of digital assets and increased institutional involvement. He pointed out that Ethereum trading volumes rose by 32% in the first half of 2024 compared to the same period in 2023 in the OTC market. However, Shulga cautioned that the full impact of ETF approvals may not be realized for six to nine months, as it takes time for innovative products to be fully integrated into financial players' portfolios. Tom Duff Gordon, VP of International Policy at Coinbase COIN, described the approval of spot ETH ETFs as "a significant milestone in the crypto ecosystem," highlighting the ongoing shift towards digital assets in the global financial system. Coinbase is serving as the custodian for 8 of the 9 newly approved ETH ETFs. However, Sergei Gorev, risk manager at YouHodler, offered a more cautious perspective. He noted that despite the launch, ETH's price dynamics appear weak, suggesting that the market may not fully believe in the great success of Ethereum ETFs. Gorev also pointed out the possibility of a "buy-on-hearsay and sell-on-facts" scenario, particularly given the timing of the launch during a period when many investors are on vacation. David Ben Kay, a former advisor and member of the governing board of the Ethereum Foundation, said the launch is a step closer to broader adoption and closer integration into traditional financial markets. This launch comes at a time of increasing institutional interest in digital assets, as Ethereum continues to solidify its position as a key player in the blockchain and decentralized finance (DeFi) sectors. By providing a regulated investment vehicle, investors may have a greater sense of security and compliance. However, due to fees and market inefficiencies the ETF price may not always perfectly track Ethereum's spot price. "Despite risk mitigation, Ethereum remains a volatile asset, and ETF values can fluctuate accordingly. Management fees and expenses associated with ETFs can impact overall returns compared to direct cryptocurrency holdings," he said. "All in all, the issuance of the spot ETH ETF is definitely a positive move in the journey of broad adoption for cryptocurrencies, but it's likely that initial adoption and market impact may be limited until there is broader acceptance and understanding of crypto ETFs," he added. As the cryptocurrency landscape continues to evolve rapidly with developments like these ETH ETFs, industry professionals and enthusiasts alike are eager to discuss the implications and future trends. What's Next: The upcoming Benzinga Future of Digital Assets event on Nov. 19 will provide a timely platform for such discussions. Read Next: Michelle Obama For Democratic Nominee? Crypto Bettors Think Her Odds Have Just Tripled Image: Shutterstock Market News and Data brought to you by Benzinga APIs