The impetus for the growth of quotes was the information that the US Securities and Exchange Commission (SEC) may approve “ether” ETFs as early as next week. This was reported by Bloomberg ETF market analyst Eric Balchunas. He clarified that the SEC has finally asked issuers to submit amended versions of applications for registration of funds by Wednesday.

In his opinion, the listing of Ethereum-based spot ETFs in the US could happen as early as July 23, of course, barring “unforeseen last-minute problems.” All 8 applicant funds are expected to be approved simultaneously on July 22, with trading beginning the next day, Reuters reports, citing its sources. Previous expert estimates for the timing of approval were announced as “until July 4.”

Since the approval of spot Bitcoin ETFs in January of this year, numerous financial institutions, including financial giants BlackRock and Fidelity, have been trying to gain permission to create cryptocurrency exchange-traded funds. Their goal is to provide investors with the ability to trade Ethereum as fund shares without having to deal with the cryptocurrency directly.

Regardless of the timing of adoption, analysts are confident in a positive decision from regulators, predicting high interest in spot “ether” funds. The most optimistic estimates suggest that net inflows in the first year of trading in such ETFs could reach $45 billion.

New forecasts from market experts turned out to be much more restrained than previous ones. Martin Leinweber, digital asset product strategist at MarketVector Indexes, said he expects much more modest inflows into new Ether ETFs and more volatility in the ETH price due to the smaller market size of Bitcoin, according to comments to Reuters.

Thomas Perfumo, head of strategy at the Kraken crypto exchange, believes that capital inflows do not need to reach the level of a Bitcoin ETF to be considered successful. Since the debut of spot Bitcoin ETFs on exchanges, the funds have had net inflows of more than $16 billion, and the funds have more than $56 billion worth of Bitcoin under management, which the funds buy to back the shares. This is about 4.5% of existing coins.



Citi bank analysts expect 30-35% of inflows into Bitcoin-based funds, or $4.7 billion to $5.4 billion in the first six months of trading. Coindesk, quoting bank representatives, wrote that one of the reasons for this flow is the lack of opportunities to use ETH, which lies in backing spot ETFs on Ethereum, in staking.

With the help of staking, holders of certain coins can use them for passive income without selling. The process itself involves blocking crypto assets for a certain period of time in order to obtain the status of a validator in that blockchain network. Bitcoin does not allow staking, but Ethereum allows it. However, the launch of such funds largely depends on the regulatory status of the Ethereum cryptocurrency in the United States, where the SEC regulator may equate the ETH cryptocurrency to unregistered securities. For this reason, ETF issuers have abandoned the use of staking.

Market volatility
Traders' expectations of a decision on US "ether" spot ETFs have led to increased volatility in the Ethereum markets. Analysts also consider the likelihood of ETH-ETF influencing the rest of the crypto market, including Bitcoin.

There is growing uncertainty in the derivatives markets, reflected in traders hedging positions using short-term ETH options contracts. As analysts from Kaiko noted, according to Coindesk, the conclusions are based on the resulting difference between contracts expiring on July 19 and contracts expiring on July 26.

An option is an agreement between a buyer and seller to buy or sell an asset (such as a stock or cryptocurrency) at a specific time at a predetermined price. Traders often use this type of derivative to hedge their trading positions against market stress.

Representatives of the Bybit exchange, together with the analytics company BlockScholes, made similar observations to Kaiko: “The main results show that investors are increasingly bullish on ETH, especially in anticipation of the imminent launch of the first ETFs in the United States. This optimism is reflected in ETH’s sustained volatility premium over BTC, which has persisted amid elevated market activity.”

Experts believe that we should not forget about the so-called “Buy the rumor, sell the news” principle, when in anticipation of news the markets behave opposite to the dynamics after the actual event.

Market observers also note that the approval of Ethereum spot ETFs could see history repeating itself with Bitcoin funds beginning to trade in January. Then, in the first two weeks of trading with these funds, the price of BTC decreased by more than 20%, with a simultaneous outflow of more than $2 billion from the Grayscale fund.

The Grayscale Bitcoin Trust (GBTC) has been a private trust for accredited investors since 2013. By the time the trust was converted into an ETF in January 2024, the company was able to accumulate approximately $25 billion in BTC.

Grayscale Ethereum Trust (ETHE) is a similar product to GBTC that is also in the process of converting to an ETF. He has almost $11 billion in ETH coins in his accounts.

Thus, traders, investors and experts do not have clear expectations for the Ethereum market after the adoption of spot ETFs. On Polymarket, an event betting platform, bettors on “Will ETH make a price high in 2024?” are in an equilibrium position. More than $410 thousand of liquidity in this dispute was divided as follows: 54% - for, 46% - against.

How much capital will flow into Ethereum-based ETFs and how will this affect prices?

In June pr
accounted for up to 29% of traffic on the largest crypto exchanges
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