Ether Futures ETFs Debut: Day 1 Assessment

A Tame Start for Ether Futures ETFs

The launch of the first-ever ether futures exchange-traded funds (ETFs) marked a notable moment, but the initial trading performance was relatively subdued compared to past crypto ETF debuts. On their debut day, six ether-related funds introduced by ProShares, Bitwise, and VanEck collectively recorded trading volumes of around $2 million. This analysis delves into the performance of these ETFs and the factors influencing their early trading activity.

Moderate Trading Volumes

Contrary to the fervor witnessed during the launch of the inaugural bitcoin futures ETF two years ago, the trading volumes for ether futures ETFs were relatively modest. The six ETFs, including ProShares Ether Strategy ETF (EETH) and VanEck’s Ethereum Strategy ETF (EFUT), achieved a combined daily trading volume of approximately $2 million, as per Yahoo Finance data.

Leading Performers

Among the ETFs, the ProShares Ether Strategy ETF (EETH) led the pack with nearly $900,000 in daily trading volume, followed by VanEck’s Ethereum Strategy ETF (EFUT), which surpassed the $400,000 mark. Notably, the Valkyrie Bitcoin Strategy ETF (BTF), which is poised to adjust its investment strategy to include exposure to ether futures starting the following day, witnessed trading volumes of approximately $4.5 million on its debut, according to Yahoo Finance data.

Comparing with Bitcoin Futures ETF

Bloomberg Intelligence's Eric Balchunas described the initial trading volumes of the ether futures ETFs as "pretty meh," particularly when compared to the debut of the first bitcoin futures ETF, ProShares Bitcoin Strategy ETF (BITO), in October 2021. BITO garnered approximately $950 million in trading volume on its first day and reached $1 billion in assets under management within two days.

Managing Expectations

Experts cautioned against comparing the performance of ether futures ETFs to BITO, emphasizing that the latter's success was unprecedented and a product of unique circumstances. Simeon Hyman, global investment strategist at ProShares, noted that BITO's launch coincided with the peak of the previous bull market, contributing to its remarkable performance. He underscored that the ether futures ETFs' growth should be evaluated independently and optimistically anticipated steady progress over time.

Market Dynamics

Bitwise Chief Investment Officer Matt Hougan pointed out that the timing of BITO's launch during a bullish market greatly contributed to its success. He acknowledged the substantial pent-up demand during such market peaks. Additionally, Hougan highlighted the distinction in size between Bitcoin and ether, with Bitcoin holding a larger market capitalization.

Long-Term Demand and Market Outlook

Neena Mishra, Director of ETF Research at Zacks Investment Research, expressed reservations regarding the long-term demand for futures ETFs, suggesting that many investors are awaiting pure exposure through spot ETFs. She speculated that the approval of a spot bitcoin ETF might precede an ether spot ETF. Ether's recent underperformance also weighed on investor sentiment. Despite its year-to-date gains, the asset had declined by nearly 4% on the day of the ETF debut.

Mishra pointed out that a surge in ether prices followed by performance-chasing by investors or clear signals from the U.S. Securities and Exchange Commission (SEC) regarding spot ETF approvals could alter the landscape. The future trajectory of these ETFs will likely be shaped by a dynamic interplay of market forces and regulatory developments.

1. blockworks.co