The crypto space is on the verge of another potentially historic moment with the first Ethereum Futures ETF in the US. Volatility Shares, a pioneer in the ETF space, has announced its intention to launch the Ether Strategy ETF (Ticker: ETHU) on October 12, 2023. If all goes as planned, this could mark the first Ether based exchange traded fund (ETF) in the United States.
A Different Approach to Investment
Volatility Shares has positioned the ETF around cash-settled Ethereum futures contracts trading on the CBOE. Notably, the ETF avoids direct investment in Ether itself. “The Fund is an exchange-traded fund that seeks to achieve its investment objective by investing its assets principally in cash-settled contracts referencing Ether… The Fund does not invest directly in Ether,” reads the SEC filing.
Stuart Barton, the CIO of Volatility Shares, voiced his optimism, saying, “Volatility Shares successfully launched the first 2x Bitcoin-linked ETF (BITX) in July and believes that ETHU is the next logical step before turning our forces to spot markets.”
Eric Balchunas, senior ETF Analyst for Bloomberg, weighed in on the audacity of Volatility Shares’ aggressive timeline: “VolatilityShares announcing they intend to list their Ether Futures ETF on Oct 12th (which would be a day or two ahead of the rest of pack (if the 75 days is adhered to).. they did same thing w $BITX”. When prompted on the likelihood of SEC’s approval, he remarked, “Well, there’s been no withdrawals so SEC looks to be okay with them … he’s probably just pushing the envelope like he did w BITX”.
A Competitive Landscape
While Volatility Shares leads the pack, they’re not alone in this pursuit. A total of 13 heavyweight financial institutions, including names like Bitwise, VanEck, Vakyrie, Roubhill, ProShares, and Grayscale, have sought the US SEC’s blessings for their Ether Futures ETFs. However, as of now, the SEC hasn’t given its green signal to any.
Drawing Inspiration from the Past
Remarkably, the first Bitcoin futures ETF in the US was launched back on October 19, 2021. At that time, ProShares won the race for the first mover effect. And this has paid off. The total assets in Bitcoin futures ETFs accounts to $1.3 billion. Of that, nearly $1.1 billion is in the ProShares Bitcoin Strategy ETF (BITO). The second largest ETF is the ProShares Short Bitcoin Strategy ETF with $73 million. No other ETF has more than $50 million in assets under management.
Bitcoin’s Impact on the Market
When the first Bitcoin futures ETF was launched, BTC was in the midst of the 2021 bull run. In the run-up to the futures ETF launch, BTC put on a 60% rally from Oct. 1 to Oct. 19, rising 60% to $66,970. In the next seven subsequent days, BTC saw a correction of about 14% before Bitcoin continued its rally to the all-time high near $69,000.
Towards a New Era for Ethereum
Whether the ETH price will experience a similar euphoria as Bitcoin in 2021 remains to be seen. At least the environment is different. While BTC was in a full blown bull market, the crypto market is currently in a phase of stagnation, possibly before the start of a new bull market. However, without a doubt, the first Ethereum Futures ETF has the potential to be a catalyst for the ETH price.
Current State of ETH
At the time of writing, ETH was trading at $1,826, just above the key support of the 38.2% Fibonacci retracement level.
The introduction of the first Ethereum Futures ETF in the US marks a new era for crypto investors. With Volatility Shares leading the pack and various heavyweight financial institutions seeking approval, the market is abuzz with anticipation. Following in the footsteps of the successful Bitcoin futures ETF launch, many believe that this new ETF could have a significant impact on the price of ETH. While the current market environment may be challenging, the potential for a new bull market cannot be dismissed. As the launch date approaches, all eyes will be on the ETH price and the response of investors to this groundbreaking development.