On October 2nd, the debut of nine Ethereum futures ETFs marked an event that had been highly anticipated in the cryptocurrency market. However, the initial trading volume was modest, totaling less than $2 million on the first day of trading.
This figure, which was expected due to the launch of the new ETF products with exposure to Ethereum, pales in comparison to the impressive performance of the ProShares Bitcoin Strategy ETF (BITO) during its launch in October 2021 when it generated over $1 billion in trading volume on its first day of trading.
The contrast between the launch of BITO and the Ethereum futures ETFs reflects the changing context in the cryptocurrency market. In October 2021, the crypto market was in a bullish period, with prices of cryptocurrencies, in general, experiencing rapid growth in just a few months. This environment undoubtedly contributed to the enthusiasm and demand for BITO. At that time, investors were eager to gain exposure to Bitcoin through an ETF, and the approval of BITO came at the right time to capitalize on that interest.
The launch of Ethereum futures ETFs in October 2023 occurs in a different market context. While Ethereum remains one of the most important cryptocurrencies, the overall market has undergone a process and has gone through several phases since 2021. The demand for Ethereum futures ETFs may be influenced by different factors from those that drove BITO at the time of its launch.
PRICE REACTION OF ETHEREUM
In the last 24 hours, Ethereum has experienced significant fluctuations, retracing from the $1,700 level to the $1,650 support level at the time of writing this article. This adds an additional element to the dynamics surrounding these new ETFs and their influence on the price of Ethereum. However, it is important to note that futures ETFs, unlike spot ETFs, do not directly impact the spot market price of Ethereum. These ETFs are based on Ethereum futures contracts rather than buying the underlying cryptocurrency, and they are traded through futures markets like the one in Chicago, meaning they do not affect the supply and demand of Ethereum in the spot market.
The approval process of cryptocurrency ETFs is a relevant point in this case. The Securities and Exchange Commission (SEC) oversaw the launch of the nine Ethereum ETFs and organized their simultaneous introduction to prevent a single fund from dominating the market. This process highlights the growing regulatory interest in cryptocurrency-related products.