Launch of ETH-ETF futures. Who’s already in the race?


While the US Securities and Exchange Commission (SEC) postpones decisions on applications for spot Bitcoin ETFs, some futures exchange-traded funds based on the second-largest cryptocurrency have already seen the light of day.

On September 29, management company Bitwise announced the launch of two “revolutionary” futures ETFs – Bitwise Ethereum Strategy ETF (AETH) and Bitwise Bitcoin ETF and Ether Equal Weight Strategy (BTOP). The products will be available on the Chicago Mercantile Exchange on October 2.

“Ethereum offers more extensive portfolio options compared to Bitcoin. Some investors view ETH as an alternative, while others view it as a traditional growth investment that includes both assets,” said company CEO Matt Hougan.

AETH invests in regulated Ethereum futures for one month. Bank of New York Mellon acts as custodian, and the expense ratio is 0.85% of AUM. The BTOP fund purchases futures for Bitcoin and ETH in equal proportions, the assets of which are stored under similar conditions.

Bitwise warned that both funds do not directly invest in or own cryptocurrencies. The shares themselves are bought and sold at market value.

On September 29, ProShares announced the launch of three ETH-ETF futures:

  • ProShares Ether Strategy ETF (EETH) – focused exclusively on futures for the second largest cryptocurrency by capitalization;
  • ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE) – consists of Bitcoin and ETH futures in a 50/50 ratio;
  • ProShares Bitcoin & Ether Market Cap Weight Strategy ETF (BETH) – assets are rebalanced monthly depending on their capitalization.

The listing will take place on the New York Stock Exchange.

“We believe BETE and BETH are innovative because they offer investors the ability to target the price performance of two leading cryptocurrencies in their brokerage accounts through a single transaction with a single ticker,” said ProShares CEO Michael Sapir.

An Ethereum futures fund from VanEck is expected to launch in the near future. The instrument will be listed on the Chicago Board Options Exchange under the ticker EFUT, but the exact date is still unknown.

The company announced that it will donate 10% of profits from the new product to Ethereum’s core developers, The Protocol Guild, for 10 years.

“If TradFi will benefit from the efforts of Ethereum’s core contributors, it makes sense that we also acknowledge their work. We encourage other asset managers/ETF issuers to consider returning funds in the same manner,” it said.

Earlier, asset managers Invesco and Galaxy Digital filed a joint application with the SEC to launch a spot ETF based on Ethereum. At the same time, on September 27, the regulator postponed a decision on similar requests from 21Shares and VanEck until the end of the year. The department is also considering a document from Hashdex.

On October 2, Grayscale filed to convert its Ethereum Trust (ETHE) into a spot ETH ETF. Launched in March 2019, the product has grown into “the world’s largest investment vehicle” based on the second-largest cryptocurrency by market capitalization, according to the statement. The value of assets under management of the fund is about $5 billion.

The company also announced that the SEC has approved its Ethereum futures ETF.

In parallel, asset manager Valkyrie began buying ETH futures contracts after the Commission approved the conversion of an existing Bitcoin ETF into a 2:1 investment instrument.

The instrument under the ticker BFT will appear on the Nasdaq exchange after October 3.

Amid reports of the launch of Ethereum funds, the rate of the asset itself went up. The coin is up 9.9% over the past week and is trading at $1,714 at the time of writing, according to CoinGecko.

Launch of ETH-ETF futures.  Who's already in the race?
15-minute ETH/USDT chart of the Binance exchange. Data: TradingView.

Ethereum capitalization also increased by 9.5% over the week, from $189 billion to $207 billion.

The expectation of an influx of institutional capital has shaken the position of the bears. On September 29, when the main wave of news about the launch of ETH-ETF passed, $9 million of short positions were closed on the futures market.

Launch of ETH-ETF futures.  Who's already in the race?
Liquidation of Ethereum positions. Data: Coinglass.

Further, the trend only worsened – on October 1, the volume of short liquidations reached $24 million.

Recall that on September 27, the SEC postponed its decision on several applications for spot Bitcoin ETFs from ARK Invest and 21Shares until January 2024. For the exchange-traded fund from the Global X Bitcoin Trust, the deadline has been extended to November 2023.

The Commission later rescheduled its response to requests from BlackRock, Invesco, Bitwise and Valkyrie.

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