In the first week of October, the number of ETFs linked to cryptocurrencies is rapidly growing, with a wave of funds that purchase ether futures beginning on Monday.
Behind bitcoin, ether is already the second most widely used cryptocurrency, but the introduction of the ETFs may make it simpler for some types of investors to obtain exposure to that sector of the cryptocurrency market.
According to Bitwise CIO Matt Hougan, Financial planners, family offices, and registered investment advisors are, the long-term purchasers of these goods. Through the Coinbase app, retail traders can learn more about ethereum, but financial professionals cannot make investments on their phones.
The Monday ether futures products and their respective net expense ratios are as follows:
- BitWise Ethereum Strategy ETF (AETH), 0.85%
- Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP), 0.85%
- ProShares Ether Strategy ETF (EETH), 0.95%
- ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE), 0.95%
- Bitcoin & Ether Market Cap Weight Strategy ETF (BETH), 0.95%
- VanEck Ethereum Strategy ETF (EFUT), 0.66%
Existing Bitcoin futures ETFs include the ProShares Bitcoin Strategy ETF (BITO), which manages assets worth roughly $900 million. Since the fund’s start in 2021, when bitcoin was almost at an all-time high, it has somewhat underperformed the price of spot bitcoin.
Will a bitcoin futures ETF function as intended was the question on everyone’s mind. Would it keep tabs on Bitcoin’s performance? Simeon Hyman, head of ProShares’ investment strategy department, claimed that in fact, it has succeeded in doing that rather successfully.
The Securities and Exchange Commission is debating what action to take in regards to a prospective spot bitcoin ETF while the ether futures funds are being launched. The agency has frequently prevented the launch of such products in recent years but a judge concluded in August that the regulator’s justification for not allowing the Grayscale Bitcoin Trust to be converted into an ETF was invalid.
Although the SEC has put off making a decision on these applications, many companies, including well-known money managers like BlackRock and cryptocurrency-focused ones like Bitwise, have active applications to start their own bitcoin ETF. The introduction of ether futures contracts may give rise to hope that spot bitcoin products will be accepted.
According to Hougan, he does believe that the clearance and introduction of these [ether futures] products is a hint that we are headed towards seeing crypto products in the relatively near future.
Monday saw a rise in bitcoin spot prices, which reached their highest point since mid-August. On Monday, the price of ether increased in the morning trading before declining in the afternoon.
The VanEck ETF’s C-Corp structure, which will alter its tax classification, is one of the funds starting on Monday that stand out from the others. Among them, according to Kyle DaCruz, director of digital asset product at VanEck, is that the fund will pay a corporate tax in exchange for lower tax rates on payouts.
In a bull market, a C-corp fund could underperform the others in terms of performance on a pre-tax basis. The C-Corp benefits actually don’t become apparent until the after-tax performance basis, according to DaCruz, so that’s a bit like comparing apples to oranges.
When Valkyrie initially started and then reversed its attempt to transform its Bitcoin Strategy ETF (BTF) into a product that held both ether and bitcoin strategies, ether futures ETFs experienced something of a false start last week. The business announced Friday afternoon that it anticipates the transition to happen by Tuesday.
On Monday, Grayscale also said that it has submitted a proposal to turn its Ethereum Trust into an ETF.
