SEC to Grant Ethereum ETF Issuers Permission to Trade Funds

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Following the recently filed S-1 amendments by the assets managers vying to list spot Ethereum ETFs in the US, the SEC has no further objections to endorsing the products. 

Consequently, the US SEC has indicated that spot Ethereum ETFs can begin trading as early as next Tuesday, July 23. This revelation hails from sources who reported the SEC’s recent communications with the ETF issuers on July 15.

Spot Ethereum ETFs Ready for Trading

According to these sources, the SEC officials told one of the issuers that there are no additional comments regarding the S-1 filings submitted for these ETFs.

Meanwhile, the issuers have been instructed to submit their final documents by Wednesday, paving the way for these funds to be listed on exchanges as soon as July 23.

Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, was the first to break this news through a social media post. In his post on X, he highlighted the SEC’s approval as a major development.

Update: Nate's instincts were right, hearing SEC finally gotten back to issuers today, asking them to return FINAL S-1s on Wed (incl fees) and then request effectiveness on Monday after close for a TUESDAY 7/23 LAUNCH. This is provided no unforeseeable last min issues of course! https://t.co/D21FD9Qf94

— Eric Balchunas (@EricBalchunas) July 15, 2024

Another source added that trading could commence next Tuesday. However, this depends on the SEC formally declaring the ETFs effective on Monday.

Over the past week, several issuers have submitted updated S-1 filings, yet many have not disclosed specific details. One such detail is the management fees the issuers will charge investors for managing the funds.

Few issuers, including well-known firms like Invesco Galaxy and VanEck, have publicly revealed their fee structures.

In the meantime, market analysts are optimistic about the potential impact of these spot-ether ETFs. For example, crypto exchange Gemini forecasts that these ETFs could attract up to $5 billion in investments within the first six months of trading.

Steno Research offers an even more positive projection, estimating inflows to reach $20 billion within the first year of trading. The anticipation of these ETFs hitting the market has already influenced the prices of many digital assets. On Monday, the price of Ether surged by 7.3%, outpacing Bitcoin’s 6% gain.

ETH Outperforming BTC Post Spot ETF Launch

A recent report by Kaiko suggests that introducing Ethereum ETFs in the United States could position Ether to outperform Bitcoin. The analysis points to several key metrics and market dynamics that could drive this shift.

One crucial indicator is the Ether to Bitcoin Price Ratio, which measures how much BTC is needed to buy one ETH. This ratio climbed to 0.05 from 0.045 before the spot Ether ETF approval. A rising ratio indicates a stronger performance for Ether than Bitcoin.

Another factor highlighted in the report is Ether’s 1% market depth, which refers to the liquidity in the ETH market. This depth is significant because lower liquidity can lead to higher volatility, while greater liquidity helps stabilize prices.

The report notes that ETH’s market depth is relatively low, suggesting that large orders could significantly impact its price.

The Ethereum Exchange Reserve supports this, tracking the amount of ETH available for purchase on exchanges. Currently, this reserve is at a multi-year low, indicating a potential supply shortage.

This low reserve could be worsened by institutional demand as investors look to fill their newly launched Ethereum ETFs, potentially driving up prices.