The launch of nine new Ethereum futures exchange-traded funds (ETFs) generated a wave of excitement, but it seems that the actual investment dollars flowing into these funds have been relatively low. On October 2, these ETF products, designed to track futures contracts linked to the value of Ethereum’s native currency Ether (ETH), became available on the market. However, only five of these funds exclusively hold Ether futures, while the other four track a mix of Bitcoin (BTC) and ETH futures contracts.
Senior Bloomberg ETF analyst Eric Balchunas remarked on the lackluster trading volume on the launch day, stating, “Pretty meh day of volume.” He also added that despite the initial average performance, it is essential to remember that these ETFs hold futures contracts, and many ETF investors prefer physical holdings over derivatives.
On the first day of trading, the combined trading volume for all nine ETFs amounted to less than $2 million. The most popular among these futures ETF products was Valkyrie’s Bitcoin Strategy ETF, which tracks a combination of Bitcoin and Ether. It accumulated a total trading volume of $882,000. It is worth noting that this ETF had been trading as a Bitcoin-only futures ETF since October 2021 but adjusted its strategy to include ETH.
However, the trading volume for Ether ETFs on their first day paled in comparison to that of ProShares Bitcoin Strategy ETF, which launched in October 2021 during a booming market for cryptocurrencies. The ProShares ETF witnessed over $1 billion in trading volume on its debut.
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Although the trading volume for the Ether ETFs may seem relatively low, Balchunas pointed out that in comparison to traditional finance ETF launches, the volume was actually quite substantial. However, he acknowledged that investors generally prefer spot ETF products over futures.
Balchunas also explained that the simultaneous launch of all these ETF products on the same day was a regulatory decision by the Securities and Exchange Commission (SEC) to prevent any single fund from dominating the market.
Meanwhile, as various U.S. companies competed for a prominent position in the emerging Ether futures market, ETF firm Volatility Shares canceled its plans to list a similar product. The firm cited a lack of opportunity at the current time for its decision.
It is clear that the launch of these Ethereum futures ETFs did not result in a significant influx of investment dollars. However, the initial trading volumes, although relatively low, were actually notable in comparison to traditional finance ETF launches. It remains to be seen how these ETFs will perform in the long run and whether investor sentiment towards futures products tied to cryptocurrencies like Ethereum will improve.
