Ethereum futures ETFs, touted as the next big thing in the world of cryptocurrency investments, made their much-anticipated debut on Oct. 2. These exchange-traded funds were designed to track futures contracts linked to the value of Ethereum’s native currency, Ether.
However, the initial trading activity suggests that market enthusiasm did not translate into significant investment dollars, especially when compared to the launch of their Bitcoin counterparts.
Mixed Results For Ether ETFs
Of the nine ETF products introduced, five exclusively hold Ether futures contracts, while the remaining four combine both Bitcoin and ETH futures. While these ETFs entered the market with high expectations, the first day of trading saw relatively subdued volume.
Eric Balchunas, a senior Bloomberg ETF analyst, expressed his observations, describing the debut as a “pretty meh day of volume.” The total trading volume for Ether ETFs on their launch day amounted to just under $2 million.
Pretty meh volume for the Ether Futures ETFs as a group, a little under $2m, about normal for a new ETF but vs $BITO (which did $200m in first 15min) it is low. Tight race bt VanEck and ProShares in the single eth lane. pic.twitter.com/F9AHtrVcVf
— Eric Balchunas (@EricBalchunas) October 2, 2023
Although this figure may be considered normal for a new ETF, it pales in comparison to the spectacular performance of the ProShares Bitcoin Strategy ETF (BITO), which made its debut in October 2021 during a booming period for the cryptocurrency market.
BITO saw a staggering $1 billion in trading volume on its first day, emphasizing the disparity between Bitcoin and Ethereum ETF launches.
Valkyrie Leads The Pack
Among the new Ether ETFs, Valkyrie’s bitcoin-ether blend ETF stood out, recording nearly $800,000 in trading volume on its first day. Notably, Valkyrie’s ETF had previously been trading as a Bitcoin-only futures ETF since October 2021 but adjusted its strategy to include exposure to Ethereum. This move seems to have paid off, as it garnered significant attention from investors.
Despite the relatively tepid debut of Ether ETFs, Balchunas pointed out that compared to traditional finance ETF launches, the trading volume witnessed was still substantial. However, he noted that investors generally prefer spot ETF products over those based on futures contracts.
Spot ETFs provide direct ownership of the underlying asset, which can be more appealing to investors seeking long-term exposure without the complexities associated with futures contracts.
The launch of nine new Ethereum futures ETFs generated modest trading activity on their first day, falling far short of the meteoric rise witnessed by Bitcoin ETFs like BITO during their debut.
While it remains to be seen how these ETFs will perform in the coming weeks and months, their initial reception suggests that the investment community may still favor traditional spot ETFs over those tied to cryptocurrency futures.
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