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Ethereum Plummets To $1,570: Traders Await A Reversal Amid Rising Bearish Sentiment

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Ethereum (ETH) has taken a significant hit, dropping to $1,570, marking its lowest fee level in 2023. This decline has led to growing concerns among traders as Ethereum’s status as the second-largest cryptocurrency by market capitalization becomes an increasingly polarizing topic.

Santiment, a well-known cryptocurrency data analytics firm, has reported on the rising bearish sentiment surrounding Ethereum. While such pessimism might be unsettling for some investors, it often serves as a reliable indicator of a potential market turnaround.

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Kaiko Research Report On Ethereum Underperformance

Meanwhile, Kaiko Research has released a comprehensive report addressing the pressing question: “Why is ETH underperforming BTC?” The report delves into the state of Ethereum’s markets following the recent launch of several future ETH Exchange-Traded Funds (ETFs).

Last week, the U.S. Securities and Exchange Commission (SEC) approved six futures-based ETH ETFs to commence trading. However, these ETFs failed to attract significant trading volume or provide a substantial boost to the crypto markets. 

The two largest ETFs by trade volume, VanEck’s EFUT and ProShares EETH saw an average daily trade volume of just $0.5 million during their first week, significantly lower than the impressive debut of the first BTC futures ETF, ProShares Bitcoin Strategy (BITO), which surpassed $1 billion in trade volume on its initial trading day.

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The report attributes Ethereum’s underperformance to a combination of factors, including the current market environment characterized by rising risk-free rates, strong U.S. economic data, and growing macroeconomic uncertainty. Additionally, none of the ETH ETFs had the advantage of being a first mover like BITO.

Despite some initial price spikes, Ethereum closed the week in the red. Its underperformance relative to the broader market has been evident since the Merge, with both the ETH/BTC price ratio and trading volume trending downwards over the past year. ETH’s spot trade volume has remained relatively stagnant over the past two months, seldom exceeding $2 billion.

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While open interest in ETH perpetual futures has risen since early September, funding rates have remained neutral to negative, suggesting a lack of clear market direction.

Nevertheless, the launch of ETH futures ETFs may not have generated substantial trading volume. However, it still provides a liquid, cost-efficient, and transparent means for investors to gain exposure to Ethereum.

Related Reading | Ethereum’s 2023 Potential: Turn Your $100 Weekly into Millions!

Ethereum Futures ETFs Make a Splash: The Rise of 9 New Players

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The world of exchange-traded funds [ETFs] based on Ethereum futures received a significant boost with the launch of VanEck’s EFUT fund. VanEck, a global investment manager, activated its EFUT fund for trading, offering investors exposure to Ether-linked investments through an exchange-traded instrument. It’s essential to note that EFUT does not directly invest in ETH or other digital assets; instead, it seeks capital appreciation by investing in Ethereum futures contracts.

EFUT is set to be listed on the Chicago Board Options Exchange [CBOE] and will be managed by Greg Krenzer, VanEck’s Head of Active Trading. Krenzer, with over two decades of experience in trading various asset categories, including futures, brings valuable expertise to the management of EFUT.

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Ethereum Futures ETFs Make a Splash: The Rise of 9 New Players 5

Joining VanEck in this venture, other prominent players in the financial market, including ProShares, Bitwise, and others, are launching their respective Ethereum Futures ETFs on October 2. These launches were made possible through filings with the U.S. Securities and Exchange Commission and official announcements.

VanEck’s commitment to the ETH community is evident through its pledge to donate 10% of EFUT’s profits to the Protocol Guild. This guild serves as a compensation plan for core contributors to the Ethereum network, providing crucial support to approximately 150 individuals responsible for maintaining the core Ethereum protocol, as reported by TronWeekly.

Grayscale, a major player in the cryptocurrency investment space, has also made significant moves. Following the introduction of Ethereum Futures ETFs in the U.S. market, Grayscale aims to convert its Grayscale ETH Trust [ETHE] into a spot ETH ETF. This transition is reflected in the filing of a 19b-4 with the SEC. Notably, regulatory permissions for new crypto ETFs are obtained from the exchange listing the fund’s shares rather than from the sponsor itself.

Ethereum Futures- A Closer Look at the Market Dynamics

As of October 2, a total of nine new ETF products have entered the market, all designed to track futures contracts linked to the value of Ethereum’s native currency. Despite witnessing trading volumes of less than $2 million on the first day, these ETFs have garnered attention.

While this trading volume pales in comparison to that of the ProShares Bitcoin Strategy ETF [BITO], which surpassed $1 billion in trading volume on its debut, experts like Bloomberg ETF analyst Eric Balchunas view this activity as substantial. He noted that although investors typically favor spot ETF products over futures, the volume observed was comparatively significant for this type of financial product launch.

Valkyrie Leads the Charge with Landmark Ethereum Futures ETF Approval

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Prominent AUM Valkyrie won the race to offer the first exchange-traded fund [ETF] featuring Ethereum futures. As confirmed by insider sources at FOX Business, the approval granted by the SEC allows investors the opportunity to speculate on the future price movements of ETH through an ETF, revolutionizing the way investors engage with cryptocurrencies. This is a groundbreaking move that signifies a significant step towards the mainstream acceptance of digital assets in the United States.

Valkyrie, a fintech powerhouse has taken a giant leap in the race for ETF dominance. Earlier, the asset manager submitted a Form 497 outlining its ambitious plan to convert its existing fund, BTF, into a formidable dual Bitcoin and Ether Exchange-Traded Fund ahead of its scheduled launch date.

However, Valkyrie is not alone in this endeavor. Eight other issuers, including VanEck, Grayscale Investments, and Bitwise, have filed applications to launch their own Ethereum ETF products. As reported by TronWeekly, Bitwise Invest has positioned itself for a strategic transition, drawing inspiration from Valkyrie Funds’ recent moves.

The company has also submitted a revised prospectus detailing its intentions to convert its well-known Bitcoin futures ETF [BITC)] into the innovative “Bitwise Bitcoin and Ethereum Equal Weight Strategy ETF,” heralding a new phase in its strategy. 

Despite these advancements, the path to full integration of cryptocurrencies into mainstream financial systems faces challenges. SEC Chairman Gary Gensler has been cautious about embracing spot ETFs, a move that would bring cryptocurrencies further into the financial mainstream, a stance reflecting the ongoing debate within regulatory circles about the potential risks and benefits associated with digital assets.

Also read: SEC Greenlights Franklin Templeton’s Spot ETF Amidst Congressional Pressure

SEC Fast-Track Valkyrie ETF Owing To Impending Gov. Shutdown

While there’s still a cloud of uncertainty hanging over spot ETFs, the looming possibility of a government shutdown has prompted the SEC to expedite the launch of the Ethereum futures ETF with Valkyrie paving the way. The crypto market now stands on the brink of a new era, one where digital assets are not just a niche investment but a pivotal component of mainstream financial portfolios, reflecting the evolving landscape of global finance.

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Image Credit: Santiment

After the announcement, which undeniably enhanced visibility and propelled the price of ETH to $1,665 by the close of Thursday’s trading session. The next in line as per Eric Balchunas, a seasoned ETF analyst with Bloomberg, would likely be a series of Ethereum-dedicated ETFs. The goal? Clear the decks before the shutdown.

Ethereum ETF Euphoria: A Potential Catalyst For Soaring All-Time Highs

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The price­ of Ethereum (ETH), the se­cond-largest cryptocurrency by market capitalization, could e­xperience a significant surge­ if the U.S. Securities and Exchange­ Commission (SEC) give their approval for multiple­ futures exchange trade­d funds (ETFs) based on Ether.

The speculation has bee­n gaining traction in the crypto market as the Wall Street Journal (WSJ) indicate­ that the SEC is considering the listing of seve­ral Ethereum futures ETFs simultane­ously. That would be a historic moment for the crypto industry, marking the first time U.S. investors could access Ethereum-based ETFs.

These financial products would track ETH futures contracts, e­nabling individuals to buy or sell ETH at predete­rmined prices and dates in the­ future. One company see­king approval for an Ethereum futures ETF is Volatility Share­s, intending to launch its product on October 12th.

Since July, the­re has been no re­quest from the SEC asking Volatility Shares to withdraw its application—a positive­ sign hinting towards a potentially favorable outcome. However, it’s important to note­ that official approval or rejection of any Ethere­um futures ETF by the SEC is yet to be­ confirmed.

Ethereum Futures ETFs Could Attract More Institutional Investors

The introduction of Ethe­reum futures ETFs in the U.S. could significantly impact the­ demand, supply, and price of ETH. A notable e­xample is the historical rally see­n in Bitcoin’s price after the introduction of Bitcoin future­s in December 2017, which attracte­d more institutional investors to ente­r the market.

A similar scenario may unfold for Ethe­reum, as it would allow investors to gain exposure­ to ETH without directly purchasing or storing it. This increased acce­ssibility could enhance liquidity and bolster ETH’s le­gitimacy as an investment asset across various se­ctors.

Although Ethereum currently stands around $1,668.03, be­low its previous peak of $4,362.35 in May 2021, news surrounding pote­ntial Ethereum futures ETFs has the­ potential to act as a strong bullish catalyst propelling ETH towards new highs.

However, inve­stors must remain aware of associated risks and uncertaintie­s related to investing in Ethe­reum futures ETFs and ETH itself. The­ actual impact these ETFs will have on ETH’s price­ depends on seve­ral factors like market sentime­nt, regulatory developme­nts, launch dates, and their subseque­nt performance.

Related Reading | Cardano’s Hydra Upgrade Boosts Scalability And Security

Ethereum’s Next Frontier: Volatility Shares Gears Up for Innovative ETF Launch

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In a bold move that’s set to reshape the landscape of cryptocurrency investment, Volatility Shares has announced plans to launch an Ethereum futures exchange-traded fund (ETF) on October 12. The company submitted a filing to the U.S. SEC on July 28, outlining its intention to introduce an ETF focusing on cash-settled Ethereum futures contracts available on the Chicago Mercantile Exchange (CME).

Notably, this ETF, named Ether Strategy ETF (Ticker: ETHU), will stand as a unique investment vehicle, as it seeks to provide investors with exposure to Ethereum and Ether without directly investing in the cryptocurrency itself. Volatility Shares had already made waves in the crypto ETF space with the successful launch of the first 2x bitcoin-linked ETF (BITX) back in July.

Eric Balchunas, the esteemed Senior ETF Analyst at Bloomberg, took to Twitter to share his insights on the matter. He revealed that Volatility Shares was positioning itself to be at the forefront of the Ethereum ETF race, possibly even launching ahead of the competition, given its track record of strategic moves.

The community has been abuzz with speculation and questions about the approval status of this innovative ETF. Balchunas responded by pointing out that the lack of withdrawals indicated a favorable stance from the SEC. However, he acknowledged that the exact launch date might be influenced by regulatory considerations, as the SEC might prefer to group these launches.

Rise of Ethereum Futures ETFs

Amidst a flurry of activity surrounding cryptocurrency ETFs, this de­velopment eme­rges. Several firms have­ submitted applications for Ethereum future­s ETFs, aiming to seize the growing inte­rest in the market’s se­cond-largest cryptocurrency. Instead of holding the­ underlying asset directly, the­se ETFs would invest in Ethere­um futures contracts traded on the CME.

While excitement abounds, the looming question remains: will the SEC grant approval? The regulatory landscape for cryptocurre­ncies has been unpre­dictable, with increased scrutiny from authoritie­s. Recent efforts to classify most cryptocurre­ncies as securities, e­xcluding Bitcoin, have added an extra laye­r of uncertainty to the industry.

However, Volatility Shares’ upcoming launch of the Ether Strategy ETF (ETHU) marks a significant stride toward mainstream adoption of cryptocurrency in traditional financial markets. As October 12 approaches, all eyes are on whether this groundbreaking ETF will be met with the green light from the SEC, potentially opening the door to a new era of crypto investment opportunities.

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