Investors in the cryptocurrency market were taken aback by the sudden approval of spot Ethereum (ETH) exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC). And now, another surprising development is on the horizon for Ether ETFs. Companies are updating their S-1 Forms on the final business day of the week, indicating that the listing process is nearing completion.
The SEC is expected to grant approval for the necessary S-1 Forms for exchange listings next week. Typically, these listings occur around July 2. Once listed, investors who are familiar with traditional markets will have the opportunity to buy and sell ETH through ETFs, similar to how they do with Bitcoin (BTC). Stay up to date with the latest technology news on NEWSLINKER.
Ethereum is anticipated to attract significant interest from long-term investors due to its potential for growth, early adoption by major financial institutions in the RWA sector, and its dominant position in the smart contract realm.
However, there are two important factors to consider. First, similar to the approval of the BTC ETF, there may be a scenario where investors “sell the news” after the listing. This possibility may have been weakened by the drop in ETH’s price to $3,500, which was triggered by BTC’s price decline. Nonetheless, the second issue poses a significant risk. After the initial listing, GBTC experienced sustained net outflows due to rapid selling by investors who benefitted from the negative premium. The same could happen to ETHE, which was purchased at a negative premium of up to 50% six to twelve months ago, as the spot price increased alongside BTC’s price surge.
Grayscale, the company behind ETHE, has not yet included the management fee in the ETF filing. This raises the question of whether they might set the management fee to zero in order to balance out the rapid sales. For ETHE holders who have long-term goals, it is crucial to set an attractive transaction fee to prevent them from switching to lower-cost alternatives while still benefiting from the strong liquidity advantage. Some investors sold GBTC due to the high transaction fee, leading them to explore alternatives like BlackRock.
The most recent updates to the S-1 Forms, which do not include transaction fees, suggest that the final versions of the forms will be available by the end of business next Friday. Therefore, the final date for the listings on July 2 will be next Friday.
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Disclaimer: The information provided in this article is not investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry inherent risks, and should conduct their own research.
