Institutional investors are ready to invest $500 million into Ethereum ETFs over the next week if they receive approval on Thursday, according to analysis by OKX, the crypto exchange.
“It’s probably just as, if not more, important as the Bitcoin ETF approval,” said Lennix Lai, OKX’s global chief commercial officer, to DL News. “The potential approval of Ethereum to be traded as a proxy under a traditional framework could bring about the next wave of institutional demand.”
Anticipation is reaching fever pitch after the U.S. Securities and Exchange Commission (SEC) appeared to soften its stance on approving a spot price exchange-traded fund for Ethereum. Ethereum has soared 24% since Monday, boosting the proof-of-stake sector — for example, Lido Staked Ether is up 27% in the last seven days, according to CoinGecko.
Several applicants, including BlackRock, Invesco Galaxy, Fidelity, and Franklin Templeton, are eagerly awaiting the SEC’s decision. Asset manager VanEck is first in line to receive a decision from the regulator. Although Van Eck’s head of digital assets research expects the SEC to respect the queue, any approval will likely extend to other applicants to avoid the appearance of favoritism.
Investors expect Ethereum ETFs to follow a similar course to the rollout of Bitcoin funds in January. Ten such products have been trading at volumes exceeding $1.5 billion since January. The advent of Bitcoin ETFs and Wall Street’s embrace of the asset class spurred a record rally across crypto, with the sector’s market value skyrocketing 50% to $2.7 trillion this year.
An Ethereum counterpart could further excite the market. Bernstein analysts predicted this week that Ether will surge to $6,600 if the funds are approved. “Ethereum could potentially surpass its all-time high soon after a potential ETH ETF approval,” Lai said. An Ethereum ETF will make it easier and cheaper for retail investors to buy exposure to the second most valuable cryptocurrency.
“Like the Bitcoin ETF before it, an Ethereum ETF will be a significant milestone for the industry,” Jean-Baptiste Graftieaux, CEO of Bitstamp, told DL News.
However, there may be a cost for crypto exchanges such as Coinbase and Kraken. ETFs allow traders to access the asset class without using digital wallets or industry-native exchanges. Going mainstream has many effects. Yet Lai downplayed the long-term risk for exchanges, stating that the ETFs will provide a gateway for newcomers to crypto. “It may actually expand the overall market size, including volume and participants, meaning it’s complementary rather than cannibalistic,” he said.