On October 2, nine ETF products were introduced to the market. These ETFs are designed to track futures contracts associated with the value of Ethereum’s native currency, Ether. So far, no clear winners have emerged among these products. They have all performed fairly average and below expectations. It’s important to remember, however, that these ETFs hold futures contracts, and that this is a long-term game.
Modest trading volumes for Ethereum futures ETFs
The first day of trading was inconclusive for the ETF. Registration amounted to $2 million in trading volume. The most popular among these ETF futures products was the Valkyrie BTF, which tracks a combination of Bitcoin and Ether. It accumulated total trading volume worth $882,000. The trading volume of these Ether ETFs on their first day was much lower compared to that of the ProShares Bitcoin Strategy ETF. Eric Balchunas commented that, compared with a traditional ETF launch in mainstream finance, the volume observed was quite significant. However, investors generally have a preference for spot ETF products over futures.
U.S. companies compete to dominate the Ether futures market
Meanwhile, various US companies have been vying to dominate the emerging Ether futures market. However, Volatility Shares has cancelled plans to list a similar product and said it sees no opportunity at present.
Why weren’t Ethereum futures ETFs an immediate success?
There are a number of reasons why these new Ethereum futures ETFs have not been a resounding success since their launch.
- Preference for cash ETF products: As mentioned earlier, investors generally have a preference for spot ETF products over futures. This may play a role in the lukewarm reception of Ethereum futures ETFs.
- Average performance: The below-average performance of these ETFs may also deter some investors.
- Competition between US companies: The struggle between different companies to dominate the emerging Ether futures market can be confusing. It prompts investors to remain cautious before choosing a particular ETF.
Conclusion
Although Ethereum futures ETFs received a mixed reception on their first day of trading, their true potential will be assessed over the long term. Over time, investors may develop a better understanding of how these financial products work. Their improvement and success will be that much simpler.
