Despite Ethereum’s superior performance compared to Bitcoin so far this year, investors are showing a lack of interest in its ETF.
Even though trading in spot Ethereum exchange-traded funds (ETFs) has not commenced yet, Bloomberg has reported that investors are displaying a negative sentiment towards the second-largest cryptocurrency. Sean Farrell, the Head of Digital Asset Strategy at Fundstrat, pointed out in a note that hedge funds could still play a crucial role in boosting these ETFs by taking advantage of basis trade opportunities – the differences between spot and futures markets. Fundstrat Global and Galaxy Digital estimate that spot Ethereum ETFs could attract $5 billion in net inflows in the first five months, but Galaxy Digital warns that the absence of staking in the ETFs might affect demand.
In spite of the pessimistic view, the approval of spot Ethereum ETFs could represent a significant milestone for the broader crypto industry. VanEck has recently hinted at its plans to introduce another spot ETF, this time for Solana.
Analysts at GSR Markets, a well-established crypto market maker, predict that the launch of spot Ethereum ETFs could open doors for more top-100 cryptocurrencies to enter traditional markets. Based on factors like decentralization and demand, GSR Markets anticipates that once Solana’s ETF is approved, investment firms will likely seek approval for spot ETFs for NEAR Protocol (NEAR), Avalanche (AVAX), Aptos (APT), and other cryptocurrencies.
However, the timeline for the U.S. Securities and Exchange Commission (SEC) to approve these filings remains uncertain. Reuters has reported, citing its sources, that the SEC could greenlight spot Ethereum ETFs as early as Jul. 4. On the other hand, Bloomberg’s senior ETF analyst Eric Balchunas believes that spot Solana ETFs are unlikely to be approved before 2025.
Since the beginning of the year, Ethereum’s price has risen by around 51%, surpassing Bitcoin by 6% and Solana by 13%, according to MarketWatch data.