ETH Retraces After Futures ETF Launches Fall Flat

Volatility is taking hold of the Ether markets as institutional asset managers pile up plans for exchange-traded funds investing in ETH.

Investors raced to purchase Ether after VanEck, the $80B investment manager, announced its intention to launch an Ether futures ETF via a Sept. 28 announcement. On Oct. 1, ETH rallied to its highest level since mid August after rival asset managers published their own ETF announcements, propelling Ethereum to a local high of roughly $1,740.

Yet despite the slew of asset managers lining up to launch their own Ethereum ETFs, their Oct. 2 launch manifested as a sell-on-the-news event.

Ether is already down 5.5% from its local high, last changing hands for $1,654, while $40B was wiped from the combined crypto market cap. Only four of the top 100 digital assets posted a gain of more than 1% over the past 24 hours, while a quarter of leading cryptocurrencies shed more than 1% from their value.

Sell On The News

VanEck was not alone in launching an ETH futures ETF on Oct. 2, with rival asset issuers scheduling the launch of their own products for the same day.

ProShares was quick to jump on the Ether ETF bandwagon. On Sept. 29, the firm announced it would debut the ProShares Ether Strategy ETF plus two ETFs offering blended exposure to ETH and BTC.

Bitwise similarly announced it would debut its own ETFs investing in ETH, plus a product offering blended exposure to ETH and BTC. Valkyrie also revealed it would begin to convert its Bitcoin ETF to offer exposure to ETH as well.

Ether futures ETFs from Volatility Shares and Kelly Strategic Management were greenlit on Oct. 2 as well.

But according to Eric Balchunas, a senior ETF analyst at Bloomberg, seven debuting Ether ETFs drove just $1.7M worth of volume on Oct. 2. Although Bulchunas commented that the activity was “about normal for a new ETF,” he noted that the debut of ProShares’ Bitcoin Strategy ETF drove $200M in its first 15 minutes after going live in October 2021.

New Products Incoming

Grayscale, the crypto-focussed asset manager, also filed with the U.S. Securities and Exchange Commission (SEC) to convert its Ethereum Trust into an ETF on Oct. 1. The Grayscale Ethereum Trust comprises the largest Ether investment product on the marketplace, commanding nearly $5B worth of assets or 2.5% of ETH’s circulating supply.

Grayscale added it plans to convert all of its existing digital asset trusts in ETFs, and is awaiting SEC approval to turn its Bitcoin Trust into an exchange-traded fund.

In another nod to Ethereum, UBS Asset Management, a subsidiary of the $4T investment firm, announced plans to launch a pilot program for an Ethereum-based tokenized Variable Capital Company investing in real-world assets on Oct. 2.