The US Securities and Exchange Commission (SEC) has approved the first Ether-based exchange-traded funds (ETFs) in the US, making the second-largest cryptocurrency by market capitalization more accessible to institutional investors. However, the products come with some drawbacks, as evidenced by the low trading volume. Two years ago, the crypto industry celebrated a milestone when the first Bitcoin ETF (ticker: BITO) was approved in the United States, opening the door to a wider investor base. Now, with the launch of various Ether ETFs, the next digital asset follows. The approval of the ETFs could be a sign of the first cracks in the SEC’s crypto-hostile stance towards digital assets, as the agency suffered major setbacks in its court cases with Grayscale and Ripple. Despite the milestone for the second-largest cryptocurrency by market capitalization, the first trading day was unspectacular. The two pure Ether ETFs from issuers ProShares and VanEck generated only 865,000 and 415,000 USD in trading volume, respectively. For comparison, the ProShares Bitcoin ETF (BITO) achieved a record volume of over one billion USD on its first trading day. The weak start of the Ether ETFs is likely also due to the inherent problems of futures-based products. As CVJ.CH explained in the report on the BITO ETF, futures funds often perform worse than direct investments, especially when more investors place positive bets on the asset (contango). The issuer must exchange the underlying futures contracts at the end of their term and pay the potential premium of the following contract, which ultimately comes at the expense of the ETF investor. As a result, BITO achieved a YTD price performance of +55.76% compared to the +67% of the spot markets. Investors are therefore eagerly awaiting a SEC decision on the first spot-based Bitcoin ETF from applicants such as BlackRock, Fidelity & Co. After all, an approval should also pave the way for a spot Ether ETF. Recently, the crypto conglomerate Grayscale applied for the conversion of its 5 billion USD ETH trust into a spot ETF.

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Information	Details
Geography	North America
Countries
Sentiment	neutral
Relevance Score	8
People	Bitwise, BlackRock, VanEck, Fidelity, ProShares
Companies	SEC, Bitwise, Grayscale, VanEck, ProShares
Currencies	Ethereum, Bitcoin, US Dollar
Securities	None