Ethereum spot ETF is about to launch. How do institutions view it?

Author: Fu Ruhe, Odaily Planet Daily

Since the U.S. Securities and Exchange Commission (SEC) approved the 19 b-4 filing for the Ethereum spot ETF on May 23, the market has been eagerly anticipating the official launch of this product. SEC Chairman Gary Gensler recently stated that the Ethereum spot ETF could officially launch this summer. The DTCC website has also listed the Ethereum spot ETF "INVESCO GALAXY ETHEREUM ETF SHS" (ticker: QETH), with the Create/Redeem section marked as N.

With SEC Chairman Gary Gensler's remarks, the timeline for the Ethereum spot ETF's launch has become clearer: it could be approved as early as June 20 and no later than September 20 (U.S. summer time).

What does the actual launch of the product mean for Ethereum, altcoins, and the crypto industry? Odaily Planet Daily has compiled analysts' and institutions' views on the launch of the Ethereum spot ETF over the past few weeks.

Perspectives from Various Parties

Bernstein analysts pointed out that the credibility of the political background behind the SEC's approval of the Ethereum ETF has diminished after Biden vetoed the SAB 121 repeal bill. They believe that the SEC's decision is more pragmatic to avoid legal disputes. The analysts also noted that the SEC may have considered a balance between market demand and legal challenges when approving the Ethereum spot ETF.

VanEck CEO Jan van Eck stated that there has been a significant shift in sentiment in the crypto market, which is related to the SEC's rule change approving the Ethereum spot ETF. He believes this is one of the most surprising things he has seen in securities regulation throughout his career. Eck pointed out that the SEC may lose jurisdiction over digital assets, making the approval of the Ethereum spot ETF an important strategic adjustment.

BTC Markets Pty CEO Caroline Bowler believes that the demand for the Ethereum spot ETF may be far lower than that for the Bitcoin spot ETF. She noted that Ethereum's recognition and market influence are not on par with Bitcoin, suggesting that the market demand for the Ethereum spot ETF may be limited. Bitcoin's market capitalization is $1.4 trillion, three times that of Ethereum, indicating a higher status for Bitcoin in the eyes of investors.

J.P. Morgan strategist Nikolaos Panigirtzoglou estimates that the Ethereum spot ETF will attract net inflows of $1 billion to $3 billion this year. He believes that this influx of funds will have a positive impact on the Ethereum market, although its scale may not match that of the Bitcoin spot ETF. Panigirtzoglou also pointed out that Ethereum's technological advantages and widespread applications are the main factors attracting investors.

Bloomberg senior ETF analyst Eric Balchunas stated that the Ethereum spot ETF may struggle to capture 20% of the assets of the Bitcoin ETF. He believes that the appeal of the Ethereum spot ETF is somewhat limited by its market recognition and investor base. Balchunas also noted that while the Ethereum spot ETF will attract some capital inflows, the overall market impact may be limited.

K33 Research senior research analyst Vetle Lunde is optimistic, expecting $4 billion in net inflows in the first five months, leading to a "huge supply absorption shock." He believes that the launch of the Ethereum spot ETF will positively impact the market, especially in terms of supply. Lunde pointed out that as the ETF attracts significant investment, the market supply of Ethereum will be significantly affected, thereby driving up prices.

Bitfinex derivatives head Jag Kooner stated that the Ethereum spot ETF could attract 10-20% of the funds currently flowing into Bitcoin ETFs. He noted that the inflow situation for the current spot Ethereum ETF largely depends on whether the SEC allows or denies clarification on staking for the spot Ethereum ETF in the future.

SEC Chairman Gary Gensler stated that the timeline for the launch of the spot Ethereum ETF largely depends on the speed of the issuer's response to the SEC's inquiries. The SEC still needs to approve the ETF issuer's registration statement, which details investor disclosures. This process typically involves extensive communication between ETF issuers and SEC officials. The approval process for the spot Ethereum ETF is influenced by various factors, including market demand, legal challenges, and internal SEC assessments. He emphasized that the SEC will complete the review of the S-1 filing as soon as possible while ensuring market transparency and protecting investor interests.

Whether the Ethereum Spot ETF Has Staking Functionality May Affect Future Price Increase Potential

Combining the above, the comments from various institutions and analysts have shifted from whether the Ethereum spot ETF can be approved to whether it can have staking functionality. As a core feature and source of income for PoS public chains, staking functionality has become a key factor influencing market fluctuations after the approval of the Ethereum spot ETF. This has led to new expectations in the market regarding whether it will have staking functionality.

However, CryptoQuant data shows that from May 23 to June 2, the Ethereum reserves on centralized exchanges (CEX) decreased by 797,000 ETH, valued at approximately $3.02 billion. This phenomenon indicates that market expectations for the Ethereum spot ETF have led to a significant outflow of Ethereum from exchanges.

Additionally, on June 12, Coinbase saw an outflow of over 336,000 ETH, setting a record for the highest single-day outflow this year, valued at over $1 billion. CryptoQuant analysis pointed out that if these withdrawals are not internal movements within exchanges, it may indicate a very optimistic long-term outlook for Ethereum. Notably, CryptoQuant analysts also highlighted similar activities on Coinbase before the Bitcoin spot ETF began trading.

Such activities reflect the market's anticipation of a price increase following the launch of the Ethereum spot ETF, and whether it has staking functionality may only be reflected in the magnitude of the price increase. However, despite the market and various institutions being full of expectations for the Ethereum spot ETF, its official launch time still depends on the SEC's progress in reviewing the S-1 filing. This summer is expected to be a critical period, and after the launch, the Ethereum market will usher in a new round of changes. Investors need to closely monitor the SEC's dynamics and market reactions to adjust their investment strategies in a timely manner.