Bloomberg: Ethereum Futures ETF Expected to be Approved in October! What Impact Will it Have on the Market?

Despite a recent setback in the cryptocurrency community due to the extended review period for a Bitcoin spot ETF, there was encouraging news from Bloomberg last week that an Ethereum futures ETF could be approved in October. If indeed approved as reported by Bloomberg, what impact would it have on the market?

Bloomberg: Ethereum Futures ETF Expected to be Approved in October

According to a recent report by Bloomberg, sources familiar with the matter revealed that the SEC is expected to approve Ethereum Futures ETFs in the near future. While it is uncertain which institution's ETF application will be approved first, it is anticipated that multiple approvals will come through in October.

In October 2021, the launch of the Bitcoin Futures ETF BITO by the fund management company ProShares marked a milestone for cryptocurrency ETFs. Since then, many institutions have attempted to introduce Ethereum futures and Bitcoin spot ETFs, but have faced hurdles from the SEC.

Recently, BlackRock's application for a Bitcoin spot ETF has attracted many institutions to join the market, renewing hopes for the approval of a Bitcoin spot ETF. However, it seems that the progress of Ethereum Futures ETF approval is moving faster. If it successfully passes, what impact will it have on the market?

When can we expect the approval of a Bitcoin spot ETF? Let's see what the former SEC Enforcement Director has to say.

What Impact Will the Approval of Ethereum Futures ETF Have on the Market?

DeFiLlama's news organization DLNews has compiled various perspectives on this issue. Here is a translation and summary of the key points:

1. Influx of Demand

   ETFs provide investors with an affordable way to invest in stocks, commodities, and cryptocurrency performance, typically with high liquidity, which will drive demand for Ethereum in the US. The approval of Ethereum Futures ETFs also boosts confidence in the approval of Bitcoin spot ETFs.

   However, technically, futures products are derivatives, as investors bet on the price of the product months later. These products are mainly targeted at institutional investors rather than retail investors, making it easier for the SEC to approve them.

2. Fee War

   The approval of Ethereum Futures ETFs may lead to asset management companies competing to attract investors, sparking a fee war.

   Asset management company Roundhill is one of the competitors in the Ethereum Futures ETF space. Bloomberg analyst James Seyffart revealed its management fee is 0.19%, significantly lower than the 0.95% and 0.76% management fees of ProShares and VanEck's Bitcoin Futures ETFs, respectively.
   

3. Closer Resemblance to Nasdaq Index

   ETH, as the token of the Ethereum network, widely used in the DeFi ecosystem, makes Ethereum more like a software, providing users with more financial utility, such as payments, collateral loans, or NFT purchases. Compared to Ethereum, Bitcoin is more like an investment asset.

   According to Coinshares' research assistant Marc Arjoon, Ethereum needs to be evaluated differently, giving it a certain practical utility value, while Bitcoin is a form of currency.

   In other words, Ethereum is more akin to a tech company, and as investors understand its complexity, the correlation between Ethereum and the Nasdaq index may surpass Bitcoin over time.

   Note: The majority of the components of the Nasdaq index are stocks listed on the Nasdaq, primarily comprising high-tech companies.

How Large Could the Ethereum Futures ETF Scale Be?

How large could the Ethereum Futures ETF scale grow? Perhaps comparing the market values of Bitcoin and Ethereum could provide a reference. Bitcoin's current market value is around $500 billion, while Ethereum's is around $200 billion.

Based on this, the scale of the Ethereum Futures ETF may be slightly less than half the market value of the Bitcoin Futures ETF, which is slightly less than $7 billion.

Note: The total assets under management of Bitcoin futures-related ETFs are less than $15 billion.