Newly-approved spot Ethereum exchange-traded funds (ETFs) could potentially hit the market by mid-June.
Following the successful 19b-4 filings for spot Ether ETFs, which allow them to be listed on exchanges, the next step is to obtain approved S-1 registration statements before trading can commence.
Bloomberg ETF analyst James Seyffart predicts that the S-1 approvals could be granted in a “couple of weeks,” although he acknowledges that the process may take longer, typically spanning up to five months.
However, fellow Bloomberg ETF analyst Eric Balchunas believes that a mid-June launch is certainly possible.
Balchunas expects a single round of comments to the S-1 amendments, similar to the feedback provided for spot Bitcoin ETF applicants, which could facilitate a quicker approval timeline.
The imp part is over. Now just logistics. My guess is there’s only one round of comments on the S-1s. And during btc one round took two weeks ish. So I this mid June is certainly poss. Just a guess tho. We will see.
— Eric Balchunas (@EricBalchunas) May 23, 2024
VanEck Files Amended S-1
VanEck, one of the applicants, wasted no time and filed its amended S-1 shortly after receiving approval for the 19b-4 filings. Other applicants are anticipated to follow suit in the near future.
However, Gabriel Shapiro, general counsel at Delphi Labs, points out that the SEC’s approval was granted by its Division of Trading and Markets unit under delegated authority. He suggests that one of the five SEC Commissioners could challenge the decision within the next 10 days.
Nevertheless, digital asset lawyer Joe Carlasare believes that such a challenge is unlikely, stating that passing it through the trading and markets division indicates no opposition from the Commissioners.
Regarding market expectations, Seyffart predicts that spot Ether ETFs could attract approximately 20% of the flows that spot Bitcoin ETFs have seen.
On the other hand, Balchunas offers a more conservative estimate of 10-15%.
Since the launch of spot Bitcoin ETFs approximately four and a half months ago, they have accumulated $13.3 billion in net inflows, according to Farside Investors.
Even capturing 20% of that figure would result in spot Ether ETFs amassing a combined $2.66 billion in inflows over a similar timeframe.
Grayscale Ethereum Trust Could See Outflows
However, concerns have arisen around potential outflows from the Grayscale Ethereum Trust if investors shift their holdings to spot Ether ETFs, mirroring the outflows witnessed with the conversion of Grayscale’s Bitcoin investment product.
The Grayscale Ethereum Trust currently holds over $11.3 billion in assets, as reported by Arkham Intelligence.
On May 23, regulatory approval was granted to eight applicants, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise, and Invesco Galaxy.
One ETF issuer, Hashdex, did not receive approval on that particular day, standing as the exception.
As reported, Singapore-based QCP Capital believes the approval of spot Ethereum ETFs in the United States could potentially trigger a substantial rally of up to 60% in the price of ETH.
QCP Capital pointed out that when spot bitcoin ETFs were approved in January, Bitcoin experienced a significant surge from $42,000 to over $73,000 within a two-week period after the ETFs began trading.
“With Friday implied volatility above 100%, the market is expecting fireworks,” QCP Capital stated.