ETH Futures Get Off To Lackluster Start

Just before the end of September, the SEC approved a series of ETH futures ETFs.

Insiders believe the decision was expedited ahead of a potential government shutdown, which would have prevented the SEC from doing its job in a timely fashion. In the event, the shutdown was avoided at the last minute, but a total of nine ETH futures ETFs were approved, and launched on Monday.

Bitcoin futures ETFs have been available since October 2021, when ProShares' BITO launched. Five of the ETH futures ETFs will only invest in ETH futures, with the other four combining BTC and ETH.

Futures ETFs do not feed through to the underlying spot market, but rely on futures contracts: Agreements to buy (or sell) the relevant asset at some point in the future. Because spot ETFs require the fund to buy/sell real crypto, they are viewed as superior to a futures ETF within the community, since they would impact spot price.

Low-Volume Launch

Overall, total volume for the nine ETH futures ETFs was below $2 million on their first day.

This is surprisingly low, given institutional interest in crypto. When BITO launched two years ago, its first-day volume was over $1 billion: By some measures, the biggest ETF debut ever (although this did take place at the peak of the last bull market). The most popular ETH ETF, VanEck's EFUT, managed $425,000 in volume.

Spot ETH ETF Bid

Meanwhile, Grayscale has applied to the SEC to convert its Ethereum Trust into a spot ETF, just as they have applied to convert GBTC into a spot BTC ETF.

In a high-profile court case that concluded in August, Grayscale won in its bid to force the SEC to reconsider their spot BTC ETF application, which the regulator had denied on grounds which the judge ruled were "arbitrary and capricious".

If and when the SEC approves a spot Bitcoin ETF, then a spot ETH ETF will likely come soon after. Having approved ETH futures ETFs, there would be no good reason to deny one.

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