An Exchange Traded Fund (ETF) is an investment fund that builds a portfolio of assets and then issues its securities tied to those assets. The Ethereum-ETF’s main asset, then, would be…? That’s right — ETH!
By buying Ethereum-ETF securities, the investor does not own the cryptocurrency directly, but the share price will directly depend on the value of the ether.
Active speculation about adopting spot ETH-ETFs on May 20 gave a tangible fundamental boost to the crypto market. ETH is up more than 24% in just a couple of days, the biggest weekly gain since the 2021 crypto bull market. MOVO analysts warn that after the official start of ETH-ETF trading, there is a high probability of “Sell the News” in the short term and sharp movements in the price of ether in a wide range of $3500 – $4100.
But it is possible not to wait for the start of trading to fully capitalize on the price change. It is easy to trade ETH on the MOVO, and using the multiplier, you can multiply the potential earnings. Trading involves risks, so we recommend using Stop Loss/Take Profit orders to limit losses and increase profits. The user-friendly interface and customization will ensure the most comfortable trading experience.
Is approval a bullish signal?
Approval of spot ETH-ETFs is not in itself a bullish signal, as they will undoubtedly be significantly inferior to BTC-ETFs in trading volumes. If you compare demand in other markets where both assets exist — everything becomes clear. Plus, ETFs on ether will not bring staking fees, which will also scare away potential investors.
Meanwhile, Bloomberg Intelligence ETF analyst Eric Balchunas expects spot ETH – ETFs to account for 10-15% of BTC-ETF assets. Several indicators suggest that institutional interest in ETH is much lower than in BTC.
Overnight, May 23, the decision was made and many are disappointed with the price movement, but there are reasons for that. The SEC approved Forms 19b-4 for ETH-ETFs, which include offerings from BlackRock, Fidelity, and Grayscale. However, their S-1 registration statements must become effective for these products to begin trading.
Ether-based ETFs will appear on the US stock exchange probably in a few weeks or months (worst case scenario). So those who bought in anticipation of the event are already in a position, and demand for the ETFs will appear in a few months. This kind of time lag is something few people expected. It could lead to market-wide corrections due to pessimism about the Fed’s monetary policy or other macroeconomic risks. After that, there is a high probability that traders will wait for that very alt-season just in the middle of summer or early fall of this year.
As for medium-term targets — analysts and traders note the level of $5000 by the fall of this year and about $8000 by the end of 2024 – early 2025. The upcoming Pectra update, which is expected in Q1 of next year, could also push up the ETN price.
Conclusion
Despite the slight negative sentiment, the ETH-ETF is another big step for the global adoption of cryptocurrencies in “traditional” finance. This event confirms the importance of the technology that Ethereum brings, as well as the willingness of giants such as BlackRock, Fidelity, and VanEck to invest in the asset.
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