Ethereum ETFs: Navigating Short-Term Uncertainty for Long-Term Gains
Here's what to know ahead of May 23 ...
In this issue of Investing Daily Dose (IDD):
🕰️Ethereum ETF Approval Is on the Clock🕰️
After winning approval and launching the successful Bitcoin (BTC) spot ETF Fidelity Wise Origin Bitcoin Fund (FBTC) in January, the Boston-based Fidelity is already onto its next crypto move – seeking approval for an Ethereum (ETH) spot ETF.
Fidelity submitted its application to the U.S. Securities and Exchange Commission (SEC) on March 27 – almost exactly two months before a May 23 application deadline.
Just like Fidelity’s Bitcoin ETF, the Ethereum ETF is an investment vehicle for folks who want to invest in crypto – but who maybe aren’t comfortable with buying and securing crypto on their own.
Demand for Bitcoin ETFs soared in the first quarter, with SEC-approved Bitcoin ETFs amassing $12.1 billion in total inflows. And we wanted to see if an Ethereum ETF would have the same type of demand.
So we asked longtime colleague David Zeiler about the near-term odds of Ethereum ETFs receiving approval. And this crypto “OG” – who established his own Bitcoin-mining venture in 2011 and ultimately became a nationally known chronicler of all things crypto – said not to bank on it.
“On the surface one would think that an Ethereum ETF is almost a sure thing as structurally the proposals should be nearly identical to the already-approved Bitcoin ETFs. But we also know that the SEC approved the Bitcoin ETFs only when forced by a court decision. So I think the SEC will be looking for any possible angle to deny. And TEAM SEC has a couple of possibilities. The most likely tactic it’ll use is saying that Ethereum is proof-of-stake rather than proof-of-work. And several ETH ETF proposals, including Fidelity’s, want to stake the ETH held by the fund. The SEC could use that to deny approval. Also, a lot of other crypto projects are built on top of Ethereum. The SEC could also try to twist that into a reason to deny. If I had to bet, I’d say the SEC will deny all 8 Ethereum ETF applications for May 23. Now, SEC chairperson Gary Gensler may look back at how he lost the fight against a Bitcoin ETF and decide not to fight an Ethereum ETF. But he’s shown himself to be stubborn, so I think it’s more likely he’ll postpone an Ethereum ETF as long as he can.”
For the short-term outlook, David says there will be a “bit of disappointment” if the Ethereum ETFs aren’t approved.
He does, however, see eventual approval as a long-term boost for Ethereum prices.
“Longer term, an Ethereum ETF will serve as one more catalyst pushing ETH prices higher as it draws in investor dollars that otherwise would not have gone into ETH,” David told us.
We’ll keep our IDD readers updated on any Ethereum ETF news and the investable takeaways from those updates.
But in case you missed it, Dave was featured in an interview over at our syndicate publication Stock Picker’s Corner (SPC) about Bitcoin and his Bitcoin price forecasts from now until the end of 2025.
Sneak preview – you don’t want to miss his forecast.
