This week, the crypto space was shaken by another major announcement: the launch of Ethereum ETFs. Wall Street greeted the new asset class calmly, with traders funneling over $100 million in new net money on the first day.
Spot Ether exchange-traded funds (ETFs) tied to the price of Ethereum made their debut on Tuesday, giving investors a new way to access cryptocurrency without buying it directly. These investment vehicles, totaling nine, generated $1 billion in trading volume on day one, representing the value exchanged among all traders.
What’s more, the funds saw more than $100 million in net new money inflows – the difference between withdrawals and deposits. These new asset classes are packaged by some of the world’s largest asset managers, including BlackRock and Fidelity, as well as crypto-focused companies like Grayscale.
On launch day, the price of Ethereum remained steady around $3,460 per token, without any significant price spikes or drops. As of now, Ethereum price has decreased by 8.3% since the launch of spot Ether ETFs on July 23, trading at $3,240.
These instruments follow the precedent set by the eleven trading spot Bitcoin ETFs. Since their launch in January, Bitcoin ETFs have accumulated over $54 billion in assets under management, with Bitcoin soaring 52% this year.
Bitcoin and Ether tokens represent units of ownership – and therefore value – of their respective blockchains. However, they differ significantly: while Bitcoin is often viewed as a long-term hedge against inflation, Ethereum is seen more as a tech investment. Ethereum’s blockchain aims to eliminate intermediaries and provide 24/7 uptime for financial services like trading and lending, as well as support for tokenization, digital collectibles, and digital identity.
Currently, crypto markets are closely correlated, but this may not always be the case. Ether ETFs offer investors the opportunity to diversify their investments within the crypto economy.
The introduction of these ETFs marks a significant step in the cryptocurrency industry’s efforts to have Ether classified as a commodity rather than a security. While the Securities and Exchange Commission has not definitively classified Ether, the filing documents describe these new products as commodity-based trusts.
