Deniz 
Soon after clearance, Galaxy Digital stated exchange-traded funds tracking Ethereum’s native token may generate multi-billion-dollar market potential.
The U.S. Securities and Exchange Commission recently agreed to speed up the licensing of these products; some analysts believe the first ETH ETF approvals could arrive next week. The vital S-1 paperwork required for the funds to enter the market still needs SEC approval.
Galaxy Vice President of Research Charles Yu stated in a Wednesday research article that ETH ETFs might conservatively see 20% or upwards of 50% of the inflows as bitcoin ETFs, which have been a surprising hit since a suite of products launched in January.
ETH ETFs vs. Bitcoin ETFs: A Comparison
Between launch and June 15, Yu notes, Bitcoin ETFs attracted $15.1 billion in net inflows. Should his forecast be accurate, comparable ether-based funds may receive between $3 billion and $7.5 billion in inflow. This is essentially in line with Bitwise Chief Investment Officer Matt Hougan’s estimate that in their first 18 months, U.S.-spot ETH ETFs may draw $15 billion worth of net inflows.
“The Bitcoin ETFs have been live for roughly just under six months and can be a useful basis to examine the likely reception of Ethereum spot-ETFs,” Yu said in the paper. Specifically, he claimed bitcoin ETFs were at least “partially responsible” for the price rise in bitcoin this year.
Impact of Ethereum ETFs on Market Adoption and Pricing
“We believe the possible introduction of spot ether ETFs should have a generally positive impact on market adoption of Ethereum and the wider crypto market,” Yu said, pointing out that ETFs will help legitimate ETH in the eyes of institutional investors, legislators, and authorities. Independent financial advisers and broker-dealer platforms will most certainly stimulate demand, he said.
Including reputable companies like BlackRock, Fidelity, and VanEck, nine issuers are fighting to release 10 spot-market ETH ETFs in the U.S. All three companies have also started spot bitcoin ETFs; BlackRock’s IBIT trust accounts for most of the bitcoin flows into the funds.
Like it did with the massive Grayscale Bitcoin Trust in January, Digital Currency Group’s Grayscale business is likewise seeking to translate its closed-end Ethereum trust into an ETF. From its somewhat high-fee fund, GBTC has witnessed at least $17.5 billion in outflows, which many market analysts—including Yu—say has lowered the price of bitcoin.
Acting as an “overhang” on the net ETF inflows, Yu also believes 319,000 ETH (worth $1.1 billion) might flow out of the Grayscale Ethereum Trust per month.
The proposed money has also been subject to restrictions by the SEC, Yu noted, such as the impossibility for companies to stake in the underlying ether to earn income, therefore restricting investor interest.
Having said that, given various fundamental differences between Bitcoin and Ethereum, the ultimate release of ETFs may have more of an impact on ETH pricing on the market. This covers reduced supply on exchanges, ETH locked up in staking programs, and reduced net emissions.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.