Fundstrats Specialist Comments on the Mood Surrounding an Ethereum ETF

While Ethereum has surpassed Bitcoin in returns since the start of this year, there appears to be a prevailing bearish sentiment among investors towards its ETF.
Although trading in spot Ethereum exchange-traded funds (ETFs) has not commenced, Bloomberg’s report suggests that investors are showing pessimism towards the second-largest cryptocurrency. Fundstrat’s Head of Digital Asset Strategy, Sean Farrell, noted in a communication that hedge funds could potentially boost these ETFs significantly by taking advantage of basis trade opportunities, which arise from discrepancies between spot and futures markets. Projections from Fundstrat Global and Galaxy Digital indicate that spot Ethereum ETFs could draw $5 billion in net inflows within the initial five months. However, Galaxy Digital warns that the absence of staking in these ETFs might impact their demand.
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The imminent launch of spot Ethereum ETFs: a comprehensive analysis
Despite the prevailing negative sentiment, the approval of spot Ethereum ETFs could mark a significant milestone for the broader cryptocurrency industry, especially with VanEck signaling its plan to introduce another spot ETF, this time for Solana.
ETF Possibility Score | Source: GSR Markets
Analysts at GSR Markets, a seasoned participant in the crypto market, forecast that the introduction of spot Ethereum ETFs could open doors for more of the top 100 cryptocurrencies to penetrate traditional markets. GSR Markets predicts that, considering aspects like decentralization and market demand, subsequent to Solana’s ETF approval, investment firms may move to apply for spot ETFs for NEAR Protocol (NEAR), Avalanche (AVAX), Aptos (APT), and other projects.
Nonetheless, the timeline for the U.S. Securities and Exchange Commission (SEC) to sanction these filings remains uncertain. Reuters, citing internal sources, reports that the approval for spot Ethereum ETFs could happen as soon as July 4. Conversely, Bloomberg’s senior ETF analyst Eric Balchunas suggests that the approval for spot Solana ETFs is unlikely before 2025.
Since the year commenced, Ethereum has seen its price surge by approximately 51%, outperforming both Bitcoin and Solana, which saw increases of 6% and 13% respectively, according to data sourced from MarketWatch.
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