The US cryptocurrency market witnessed the debut of the first exchange-traded funds (ETFs) that track Ether futures contracts on Monday, but the reaction from the investors and the price of Ether was rather lukewarm.
Ether, the second-largest cryptocurrency by market capitalization, fell about 2% since Friday, trading around $1,640 in New York. Bitcoin, the largest digital currency, rose by a similar amount over the same period.
Ether’s Price Hasn’t Picked Up
The new ETFs, offered by ProShares, VanEck, and Bitwise, among others, allow investors to gain exposure to Ether futures without having to buy or store the actual cryptocurrency. Ether futures are contracts that obligate the buyer or seller to exchange Ether at a predetermined price and date.
According to initial data compiled by Bloomberg Intelligence, about $15 million went toward the Ether futures ETFs on Monday. That was relatively muted compared to the fanfare that surrounded the ProShares Bitcoin Strategy ETF which launched in 2021 at the height of the crypto boom. BITO originally gathered $1 billion in assets after two days, but flows slowed over time.
Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, said that any crypto-related launch tends to be a “buy the rumor, sell the news” event. He cited the example of OpenAI’s GPT-4, a powerful AI model that can generate realistic text and images, which also saw a drop in price after its launch.
Balchunas also said that the launch of Ether futures ETFs could still be seen as a positive development in the long run, as they serve as bridges to connect the crypto world with the traditional wealth management industry. He added that the ultimate goal for many crypto enthusiasts is to see a spot Bitcoin ETF, which would track the actual price of Bitcoin rather than its futures contracts.
However, the prospects of a spot Bitcoin ETF remain uncertain, as the US Securities and Exchange Commission (SEC) has been hesitant to approve such products due to concerns over market manipulation, fraud, and investor protection. The SEC is also involved in several crypto-related lawsuits and has said that several tokens are securities.