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Should Low Ethereum Futures ETF Trading Volumes Be a Cause for Concern?

2 mins
Updated by Kyle Baird
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In Brief

  • Ethereum exchange-traded funds (ETF) launched this week, underwhelmed speculators with a slow start.
  • The six funds, including the largest ProShares Ether Strategy ETF, amassed a total trading volume of $1.92 million.
  • Analysts suggest a similar pattern to Bitcoin's initial surge and fall, indicating a potential scenario for Ethereum.
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The gaze of the crypto community has been fixed on the performance of the much-anticipated Ethereum future exchange-traded funds (ETF) that were launched this week.

However, analysts have provided explanations for why the initial week did not meet expectations in terms of price and value.

Lack of Significant Attraction for Ethereum Futures ETFs

The debut of several Ethereum Future ETFs this week has left many speculators who have eagerly anticipated it for over a year feeling underwhelmed.

Nine Ethereum Futures ETFs were introduced to the market this week. These were launched by investment firms ProShares, VanEck, Bitwise, Valkyrie, Kelly, and Volshares.

However, upon their launch on October 2, Ether Futures attracted just under $2 million in flows, as per a recent report. 

Anticipating a price increase, Ethereum’s price rose by approximately 4.5% to reach $1,734 the day before the launch on October 1. However, it concluded on October 2 at $1,659, marking a 4% decline.

At the time of publication, Ethereum’s price is $1,643.

Ethereum Price Chart 7 Days. Source: BeInCrypto
Ethereum Price Chart 7 Days. Source: BeInCrypto

On October 2, the six funds amassed a total trading volume of $1.92 million. However, the largest among them, the ProShares Ether Strategy ETF, contributed significantly with a trading volume of $878,560, making up 45.7% of the total volume.

This presents a notable difference compared to the rapid attainment of $1 billion in flows within just two days for ProShares Bitcoin Strategy ETF (BITO) upon its 2021 launch. However, the overall crypto market was in a robust phase during that time.

Meanwhile, another user on X (formerly Twitter) user highlighted that it represented only 0.2% of the trading volume in comparison to the initial day of Bitcoin futures trading.

However, there’s no need for alarm. According to Eric Balchunas, a senior ETF analyst at Bloomberg, this has occurred previously:

“Any crypto-related launch tends to be a ‘buy the rumor, sell the news’ event,”

Destiny Awaits for Ethereum Spot ETFs

He also observed a decrease in the price of Bitcoin following the initial surge in BITO demand. He suggests a similar potential scenario for Ethereum’s price:

“If you look at BITO, Bitcoin went down a lot after that […] I wouldn’t be surprised if this happens with futures ETFs either.”

Meanwhile, the SEC recently announced that it would be delaying its approval decisions for Ethereum spot ETFs. An announcement will not be made until at least the end of 2023.

According to two separate filings, the SEC has postponed the outcome for both ARK 21Shares Ethereum ETF and the VanEck Ethereum ETF.

Both firms submitted applications for the Ethereum spot ETF on September 6.

If granted approval, these would mark the inaugural Ether-based ETFs providing direct exposure to ETH within the US.

Meanwhile, on October 2, Grayscale joined the list of investment firms to apply for an Ethereum spot ETF. In a filing, the New York Stock Exchange (NYSE) made the request to the SEC.

The filing seeks permission for the conversion of Grayscale Ethereum Trust (ETHE) into a spot Ethereum ETF.

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.