After the listing of the Bitcoin spot ETF for half a year, the second largest cryptocurrency, Ethereum, which the crypto community has been eagerly anticipating, has also welcomed the spot ETF.
On Monday, July 22nd, Eastern Time, according to regulatory documents and announcements from related companies, the U.S. Securities and Exchange Commission (SEC) approved the listing of the Ethereum Exchange Traded Fund (ETF), marking another significant development in the cryptocurrency market. This approval not only provides a new investment channel for Ethereum but also reflects the increasing acceptance and recognition of digital assets by regulatory agencies.
The cryptocurrency market has shown rapid development in recent years, with the total market value growing from tens of billions of dollars a few years ago to tens of trillions of dollars today. More and more investors, especially institutional investors, are beginning to pay attention to and invest in digital assets, including Ethereum. The gradual standardization and legalization of the regulatory environment further enhance market confidence.
Media reporters have confirmed this official news, stating that the SEC has made the Ethereum spot ETF effective, with 424(b) forms being released one after another. Everything is ready, and the final step is the listing at 9:30 am Eastern Time on Tuesday.
The game is officially on.
Ethereum ETF Approval: Early Deployment or Cautious Observation
In the past, the U.S. Securities and Exchange Commission (SEC) has been reviewing whether to approve the Ethereum ETF.
In January of this year, the agency approved a Bitcoin ETF, attracting billions of dollars in capital inflows to Bitcoin, which lit the way for the approval of the Ethereum ETF.
After a long period of silence, in late May, U.S. SEC officials suddenly began contacting potential ETF issuers, and the Republican Party of Trump also extended an olive branch to cryptocurrencies, with various factors coming into play.
On May 23rd, the regulatory agency approved a key document, raising the approval probability of the Ethereum ETF from 25% to 75%, indicating a shift in regulatory attitude and market expectations, paving the way for full approval of the Ethereum ETF. Since the announcement of this news, the price of Ethereum has risen by about 25% in a few days, showing a positive market response to this news.
Finally, on Monday, July 22nd, Eastern Time, according to regulatory documents and announcements from related companies, the U.S. Securities and Exchange Commission (SEC) approved the listing of the Ethereum Exchange Traded Fund (ETF). It is reported that the SEC has notified eight initial applicants to launch ETFs linked to Ethereum, and their products will begin trading on July 23rd (Tuesday) local time.
The first batch of ETF issuers directly investing in Ethereum include: 21Shares, Bitwise Asset Management, BlackRock, Franklin Templeton, Fidelity Investments, VanEck, and Invesco.
These companies are heavyweight players in the financial market, and their applications reflect the high interest and confidence of mainstream financial institutions in the cryptocurrency market. The Chicago Mercantile Exchange, Nasdaq, and the New York Stock Exchange have all confirmed that they are ready to launch Ethereum ETF trading.
According to data provider Morningstar, among the issuers of Ethereum spot ETFs, except for Grayscale, most have set fees ranging from 0.19% to 0.25%. Grayscale Ethereum Trust ETF will maintain a fixed fee of 2.5%, but will waive fees for the first six months up to a maximum cumulative managed asset of $2 billion.
In May, market analysts mentioned that the launch of the Ethereum ETF could lead to a surge in market demand, resulting in a tight supply of Ethereum. In a situation of tight supply, the price of Ethereum may become more sensitive to fund inflows, and locked Ethereum cannot be used to meet the additional demand of the ETF, further exacerbating the supply shortage and driving up the price of Ethereum.
Currently, the price of Ethereum has risen from around $2,800 in early July to the current $3,449.46, an increase of over 17%. During the same period, the price of Bitcoin has also risen from around $55,000 to $67,849.62, an increase of about 23%. These data further demonstrate the optimistic expectations of the market for the Ethereum ETF and the overall cryptocurrency market.
Therefore, the listing of the Ethereum ETF may herald a crucial "turning point" before the price surge.
How to Purchase Ethereum ETF
According to regulatory documents and announcements from related companies, the SEC has notified the eight initial companies directly investing in Ethereum ETF that their products will begin trading on July 23rd (Tuesday) local time.
The Chicago Mercantile Exchange, Nasdaq, and the New York Stock Exchange have all confirmed that they are ready to launch Ethereum ETF trading.
The first batch of ETF issuers directly investing in Ethereum include: 21Shares, Bitwise Asset Management, BlackRock, Franklin Templeton, Fidelity Investments, VanEck, and Invesco. Below are the code information for the nine Ethereum ETFs:
The emergence of the Ethereum spot ETF provides investors with a more convenient way to invest in Ethereum, especially important for investors who are already familiar with the traditional stock market. Compared to directly purchasing Ethereum on cryptocurrency exchanges, purchasing Ethereum spot ETF through the stock market or even a mobile app for one-click transfer is much simpler.
Now, we only need to wait for the related ETFs to officially start trading at 21:30 Beijing time on July 23rd. Once trading is allowed, investors can choose a simple and convenient tool like BiyaPay for one-click transfer to purchase the Ethereum spot ETF, directly depositing USD or other fiat currencies, or cryptocurrencies like USDT, and then one-click purchase the spot ETF, without the need to use a new exchange, create a new trading account, or learn how to use digital wallets, making it easy for even ordinary investors with little knowledge of cryptocurrencies to participate.
These nine spot Ethereum ETFs are about to start trading. In terms of underlying mechanisms, these funds are almost identical. Each ETF is managed by reputable fund managers, holding spot Ethereum through qualified custodians, and these companies are heavyweight players in the financial market, reflecting the high interest and confidence of mainstream financial institutions in the cryptocurrency market.
Impact of Ethereum ETF Listing
Price of Ethereum ETF
Firstly, the impact on the price of Ethereum is obvious.
The listing of the Ethereum ETF is expected to significantly increase the demand for Ethereum, thereby driving up its price. In the week following the announcement of the approval, the price of Ethereum has already risen by about 30%. Analysts generally believe that the listing of the ETF will further enhance the market liquidity and investment value of Ethereum, attracting more investors to enter the market.
In January of this year, the spot BTC ETF was approved and began trading, with billions of dollars in capital inflows within just two months, pushing the price of the largest cryptocurrency to a new all-time high.
Some analysts predict that although the fund inflows into the spot Ethereum ETF may not be as high as the Bitcoin ETF, it may still push the price of Ethereum to nearly double to $6,500, meaning that the Ethereum ETF is expected to drive the spot price close to doubling.
Research firm Steno Research predicts that the newly launched ETF may see capital inflows of $15 to $20 billion in the first year, roughly the same scale as the inflows in the first seven months after the launch of the Bitcoin spot ETF.
Impact on Market Investors
Before the approval of the ETF, the Ethereum market investors were mainly retail investors, with significant differences in investment experience, risk tolerance, and investment strategies.
Now, the approval of the ETF provides institutional investors with a compliant, convenient, and relatively risk-controlled investment channel, reducing the barriers and operational difficulties for them to enter the Ethereum market. Institutional investors, due to their capital scale, professional teams, and risk control capabilities, often have the advantage of quickly and on a larger scale deploying new investment opportunities.
With the increased participation of institutional investors in the Ethereum ETF, the liquidity and stability of the Ethereum market will significantly increase, attracting a large influx of funds into the Ethereum market. Their influence and share of funds in the market will also correspondingly increase.
Retail investors will also benefit from this. The market standardization and transparency brought by the ETF will allow them to more easily invest in Ethereum, enjoy its returns, and diversify investment risks. The transparency and low cost provided by the ETF make it an ideal choice for retail investors, and they can also learn from the professional operations and strategies of institutional investors to improve their investment skills.
Impact on the Cryptocurrency Industry
The approval of the Ethereum ETF signifies that the cryptocurrency industry is moving towards a more regulated and recognized direction. This approval will prompt more cryptocurrency projects to seek legalization and standardization, enhancing the industry's reputation and credibility. For example, in 2021, the ProShares Bitcoin Futures ETF (BITO) was approved by the SEC. According to Sina Finance, the price of Bitcoin surged throughout the week, reaching over $62,000 at its peak. On October 20th, the price of Bitcoin broke through the historical high of $64,843 set on April 11, 2021, reaching $66,000, with a daily increase of 5.64%.
The introduction of ETFs is not limited to Ethereum and may also drive the development and approval of other cryptocurrency ETFs, further enriching the market products, promoting financial innovation, and advancing the development of the entire cryptocurrency industry.
The approval of the Ethereum ETF by regulatory agencies sends a positive signal, indicating that regulators are beginning to recognize the legitimacy and potential of cryptocurrencies. This will enhance the confidence of market participants, attracting more traditional financial institutions and investors to enter the cryptocurrency market.
In conclusion, the approval of the Ethereum ETF will clearly bring a significant influx of new funds into the Ethereum market.
Future Prospects and Risks
The approval of the Ethereum ETF undoubtedly brings new opportunities and vitality to the cryptocurrency market. The influx of a large amount of capital is expected to drive up the price of Ethereum and further enhance its market position. With more investors participating in Ethereum investment through the ETF, the market's liquidity and depth may be enhanced, which will help reduce trading costs and price fluctuations.
The approval of the Ethereum ETF by the SEC may trigger other regulatory agencies in other countries and regions to follow suit and implement similar regulations. This will bring more standardization and transparency to the global cryptocurrency market, enhancing the legitimacy and credibility of the entire industry. However, we must also be aware of some potential issues.
Standard & Poor's Global has warned that the approval of the Ethereum ETF may exacerbate the problem of over-concentration in the Ethereum ecosystem, which may expose the Ethereum network to operational risks. The cryptocurrency market is relatively new and immature, making it susceptible to market manipulation.
Although the introduction of ETFs may increase market transparency and standardization, it still cannot rule out the possibility of large institutional investors manipulating the price of Ethereum to affect the value of the ETF. Although the Ethereum ETF cannot currently be staked, temporarily avoiding dilution of the market share of other Ethereum ecosystem projects, it also reduces the attractiveness of the ETF to some extent, and the buying of institutional clients may be affected.
It is worth noting that the recently acclaimed world's largest Bitcoin event is about to take place. Former President Trump plans to speak at the conference, and this event is expected to have a profound impact on the cryptocurrency market.
During his campaign, Trump repeatedly expressed support for cryptocurrencies and promised to end hostile policies towards the industry. If implemented, this will greatly boost market confidence, attract more investors, and stabilize market expectations. At the same time, his support may prompt more institutional investors to enter, providing them with a more stable and protected investment environment, enhancing market liquidity and stability, and bringing in a large influx of capital.
In addition, Trump advocates ending hostile attitudes, reducing regulatory burdens, promoting innovation and investment, which, if realized, will create a more favorable market environment, drive technological development and application, and attract more companies and individuals to participate.
As a former president and a powerful presidential candidate, Trump's statements and policy proposals not only affect the domestic market in the United States but may also trigger global chain reactions, prompting other countries to follow suit or adjust their regulatory strategies, further promoting the development of the global cryptocurrency market and driving its growth and maturity.
Conclusion
Overall, the approval of the Ethereum ETF is an important milestone in the development of the cryptocurrency market, but the future development is still full of challenges and variables. Market participants need to closely monitor changes in various factors in order to make wise investment decisions. At the same time, the industry also looks forward to continuous progress in technological innovation, regulatory standardization, and market maturity, laying the foundation for the healthy and stable development of cryptocurrencies.
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