Investors have poured nearly a quarter-billion dollars into spot Ethereum ETFs over the past four days, even as the price is little changed, on hopes the battered cryptocurrency’s planned structural changes will spark widespread use and investment.
U.S. spot ethereum exchange-traded funds, eight of which were approved for trading last June, a half-year after spot bitcoin ETFs hit the market, pulled in $245 million over the past four days, according to London-based Coinshares. Those funds fell in today’s trading.
While the price of Ethereum is little-changed over the past few days and down 45% since the year began, it’s surged 25% since dipping to a one-year low in early April, according to CoinMarketCap.com. Investors are betting that the Securities and Exchange Commission will permit so-called staking—the cryptocurrency’s validation mechanism that acts as a sort of yield device—in the ETFs.
“The idea that you could get yield from a crypto ETF is certainly a strong institutional narrative and anecdotally has made these kinds of products successful in Europe and elsewhere,” Luke Nolan, senior Ethereum research associate at London-based Coinshares, said in an email. “It helps drive conversations that we have with investors here in Europe.”
Ethereum’s developers are also eyeing technological changes—so-called Layer 1 scaling—to counteract the token’s reputation for being slow and expensive compared with others, Nolan said.
“It is too early to say whether this has legs or not, but these factors all seem to be playing in Ethereum’s favor in the short run and if the overall market holds up well over the next few weeks, could spark a long-awaited ETH rally,” Nolan wrote.
Ethereum’s declines contrast with No. 1 crypto bitcoin, which is little-changed since the year began and 55% higher year over year.
Source: etf.com
The largest Ethereum ETF, the $2.25 billion iShares Ethereum Trust (ETHA) was down 3.1% at midday.
