- Roundhill Investments and VanEck have followed VolatilityShares to file for Ether Futures ETF.
- Experts predict a brutal competition that could become crowded fast, given the small nature of the space.
- The filings come as the SEC continues to work through the Spot BTC ETF filings, except for BlackRock’s thats accepted pending approval.
Nate Geraci, President at ETF Store and renowned Exchange Traded Fund (ETF) educator has said that he expects demand for Ethereum futures ETFs to be fairly limited overall, adding that a combined product of BTC+ETH futures ETFs would have a better chance.
I expect demand for ETH futures ETFs to be fairly limited overall…— Nate Geraci (@NateGeraci) August 3, 2023
BTC futures ETFs have < $1.5bil AUM & much of that came in first few days post-launch.
Combined BTC + ETH futures ETFs prob best path to succeed for now IMO.
Ultimately, investors want real deal (spot ETFs). https://t.co/hNx61wmYbz
Geraci also observes that if Grayscale wins lawsuit and if the SEC allows both ETH futures ETFs and spot BTC ETFs, then chances of a spot ETH ETF approval would also be high.
Roundhill, Volatility Shares, VanEck file for an Ethereum Futures ETF
With the US Securities and Exchanges Commission (SEC) still deliberating the Spot BTC ETF filings, other players have started applying for a different investment as institutional interest in the crypto space grows. Based on recent reports, Roundhill, VolatilityShares, and VanEck have filed for Ether Futures ETFs, a different trade line, as the Spot campaign appears overbooked.
An Ether Futures ETF, if approved, would offer investors exposure to digital assets by tracking the cryptocurrency's futures contracts. Such a fund gives investors access to the price movement of Ethereum via a traditional investment vehicle, all the while eliminating the challenges of buying, storing, and safekeeping ETH. It is different from a Spot BTC ETF, which tracks the price of actual, physical Bitcoin.
A clear difference exists between a Spot BTC ETF and an ETH Futures ETF, with the latter being more likely to be approved despite the former being superior. Nevertheless, the SEC has never approved any ETF applications tracking Ethereum futures contracts, with etf.com analyst Sumit Roy attributing the hesitation to the fact that "there is ambiguity concerning whether ether is a security." Another explanation is concerns around Ether futures liquidity levels.
Volatility Shares, boasting up to $173.6 million in four ETFs, applied for the ETH ETF on July 28, as the Spot race became overcrowded with the likes of BlackRock, Fidelity Investments, Invesco, WisdomTree and Ark Invest, among others, seeking the SEC's approval to launch offer Spot BTC ETFs.
VolatilityShares has filed for an Ether Futures (ETHU). Interesting given SEC made some recent Ether filers withdrawal but.. VolShares just got (against the odds) a 2x Bitcoin Futures ETF out so maybe they feeling confident time is right, not sure.. h/t @NateGeraci pic.twitter.com/Iv9ywqaH2I— Eric Balchunas (@EricBalchunas) July 31, 2023
Roundhill and VanEck filed their ETH futures ETF applications on August 1, with experts attributing Roundhill's preference of ETH futures to the Spot BTC ETF alternative as a move to bolster its expertise in the metaverse or a possible first mover advantage, given the stiff competition in the spot ETF camp.
Could be. Or maybe they can be almost first to market here as Spot race is too crowded w big fish?— Eric Balchunas (@EricBalchunas) August 1, 2023
Roundhill Investments is an SEC-registered investment advisor committed to provide innovative ETFs. The firm debuted in 2018, reinvigorating up the stodgy investment management sector before launching several first-to-market thematic funds. These include the first Metaverse, Sports Betting, and Generative AI ETFs. Van Eck on the other hand is a global investment manager.
Spot BTC ETF narrative ushered in Ether futures ETF
To some, the interest in BTC ETF made it only a matter of time before ETH ETFs become a headline topic. It is worth mentioning that Grayscale Investments, Valkyrie, and Bitwise Asset Management beat Roundhill, Volatility Shares, and VanEck file to it after filing for ETH futures ETF in May. However, they rescinded their filings without citing reasons, but all signs point to the security argument that continues to taunt ETH.
According to ETF Store Inc. President Nate Geraci, famous for being the first investment advisor to offer only ETFs, if the SEC approves the ETH futures ETFs, past applicants like Grayscale would jump back into the race despite withdrawing their filings. The ensuing interest and subsequent filings would also be way faster than how it happened in the Spot BTC ETF race considering the current one is a rather smaller market.
If SEC is a go w/ ether futures ETFs, I would assume the usual suspects jump back in... Bitwise, Grayscale, Valkyrie, etc, etc. Could become crowded very quickly & is a much smaller market IMO. Just look at bitcoin futures ETFs.— Nate Geraci (@NateGeraci) August 1, 2023
Either way, will be brutal competition.
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