On July 23, the launch of Ethereum Spot ETFs marked a milestone in the cryptocurrency market, as Bitwise Asset Management’s Chief Investment Officer, Matt Hougan, expressed his enthusiasm about the future of crypto exchange-traded funds (ETFs). The debut of these ETFs was met with significant investor interest, with Ethereum ETFs demonstrating robust initial performance.
Ethereum ETFs Exceed Expectations
Hougan highlighted the success of the newly introduced Ether ETFs, including Bitwise’s ETH ETF (ETHW), which alone garnered over $200 million on its first day. “The performance has surpassed my expectations even before midday,” Hougan told Bloomberg.
He pointed out that the trading volume for these new ETFs reached approximately half a billion dollars, a stark contrast to the average one million dollars traded by newly launched ETFs. This substantial trading activity places Ethereum ETFs among the most successful ETF launches, second only to Bitcoin ETFs.
The strong performance of Ether ETFs is seen as a positive indicator for the broader crypto market. Hougan suggested that the successful launch of these ETFs signifies the beginning of a new era for crypto investments. He anticipates that the trend will continue, leading to the introduction of ETFs for various cryptocurrencies, including Solana.
Solana and Other Altcoin ETFs on the Horizon
Hougan noted that filings for Solana ETFs by VanEck and 21Shares are already in progress, signaling the potential inclusion of other altcoins in the ETF market. The initial enthusiasm surrounding the Ethereum ETFs has led experts to forecast similar developments for other cryptocurrencies.
On the first day of trading, BlackRock’s ETH ETF (ETHA) led with an impressive $265 million in inflows, setting the benchmark for its competitors. Fidelity’s Ether ETF (FETH) followed with over $70 million, while other players like Invesco, 21Shares, VanEck, and Franklin recorded inflows ranging from $5 million to $15 million.
Conversely, Grayscale’s ETHE fund experienced substantial outflows totaling $484 million, a significant 5% of its $10 billion in assets under management. This outflow came on the heels of Grayscale’s transfer of $1 billion to its Ethereum Mini-Trust, aimed at providing seed capital for the ETF launch.
Expert Insights and Future Projections
Bloomberg analyst Eric Balchunas emphasized the exceptional nature of these launches, noting on social media that ETHA achieved the highest day-one volume among new ETFs over the past year, excluding Bitcoin ETFs. He also highlighted the strong performance of ETHW and FETH.
Matthew Sigel, Head of Digital Assets Research at VanEck, praised the outcome for Ethereum ETFs, describing it as a “great result” given that the collective trading volume reached $1.1 billion.
Looking forward, Hougan expects institutional investors to play a more substantial role in the inflows for BTC and ETH ETFs. Currently, institutional investors contribute 5-6% of Bitcoin ETF inflows, but Hougan anticipates this figure will rise to 50%.
Spencer Bogart of Blockchain Capital estimates that Ether ETFs could attract over $10 billion in inflows within the first year. Ryan Rasmussen of Bitwise projects that the price of ETH could reach between $6,500 and $7,500.
The SEC’s approval of Ethereum ETFs has ignited speculation about the potential approval of ETFs for other cryptocurrencies. Standard Chartered Bank’s Geoffrey Kendrick has predicted that the SEC may approve ETFs for Solana and XRP by 2025. Although the approval process is complex and unlikely to be completed in 2024, Kendrick believes that the SEC’s decision not to classify ETH as a security could facilitate the approval of similar ETFs for other cryptocurrencies in the future.
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