Ether spot ETFs, which will allow investors to buy the second most popular cryptocurrency just like stocks, will begin trading in the United States next week.
The Securities and Exchange Commission (SEC) has approved filings from at least three issuers, and a total of eight ETFs are expected to launch at the same time.
Speaking to Investing.com, Saul (Shauli) Rejwan, managing partner at Masterkey VC, said he believes the launch of the Spot Ether ETF has the potential to drive the price of Ethereum to new all-time highs, similar to what happened with .
“It’s funny to think about it, but the main driver of the market is not meme coins, Elon Musk, Larry Fink’s admiration for Bitcoin or the opportunities that artificial intelligence and infrastructure present for cryptocurrencies. It’s actually American politicians who have pushed for regulation after many years of resistance,” Rejwan said.
The major altcoin began its rally in earnest in June when it became clear that Ether funds would soon be approved.
Rejwan attributed this to “greater accessibility and legitimacy,” which could attract a broader range of investors. However, he cautioned that market dynamics and broader economic conditions will also play a crucial role in determining price movements.
A 'buy the rumor, sell the news' event?
Rejwan acknowledges the possibility. “It’s possible that the launch of Ether ETFs follows the ‘buy the rumor, sell the news’ pattern. Just before May, the price of Ethereum was hovering around $2,500, indicating that some of the news is already priced in.”
“I’m not sure all the news is out yet, though. The presidential campaign just changed course and I’d say there’s more news on the horizon. I’m looking forward to Nakamoto’s stage in Nashville later this month.”
He notes that market participants often anticipate such events and price in their expectations beforehand. “When the actual event occurs, some investors may take profits, leading to short-term volatility. However, the long-term impact of ether ETFs is likely to be positive due to the structural support they provide.”
Comparing Ethereum and Bitcoin ETF inflows
The January launch of U.S.-based bitcoin spot exchange-traded funds was one of the most successful in ETF history, attracting about $16 billion in net inflows over its lifetime. By the end of June, those funds that track the bitcoin spot price had nearly $38 billion in assets. However, holdings of the Grayscale fund, which converted its $27 billion bitcoin trust into an ETF, fell by more than a third.
Rejwan expects post-approval Ethereum ETF inflows to differ from the Bitcoin experience due to Ethereum’s unique value propositions.
While Ether has emerged as something of a blue-chip currency, its ETFs could be smaller, at least initially, compared to their Bitcoin counterparts as features like smart contracts and decentralized applications attract a different investor base. “While initial inflows might not exactly mirror those of Bitcoin, we anticipate substantial interest from both institutional and retail investors,” he said.
Opening the door to other cryptocurrency ETFs
Rejwan believes that the successful launch of Ether ETFs could pave the way for ETFs and other exchange-traded crypto products.
“Once regulatory and market frameworks are in place for a major asset, it becomes easier to introduce additional products,” he said. This could lead to “a more diverse and robust market” for crypto-based ETFs, broadening investor participation and further legitimizing the space.
