Why a Bitcoin ETF Approval Could Lead to an Ether ETF
If a spot bitcoin ETF is approved in the U.S., it would be difficult to argue against the approval of a spot ether ETF as well. Grayscale, the digital asset management firm, has already expressed its intention to convert its Ethereum Trust (ETHE) and other products into ETFs. While smaller crypto assets like SOL and ATOM may not see the same opportunities, we have seen firsthand that ethereum ETFs can work.
When ethereum ETFs were launched in Canada, regulators were comfortable with the product due to the presence of a regulated futures market for ETH. This allowed market makers to hedge risk while creating and redeeming units. Following the approval of a bitcoin ETF, it is likely that an ether ETF would quickly follow.
The discount on ETHE is currently higher than GBTC’s, which presents a significant arbitrage opportunity. Additionally, ETH markets are less liquid compared to BTC, so the incremental buying from an ETF could have a more substantial impact on price. Furthermore, as the leading platform for Web3 development, ETH offers better upside potential.
Hot Take: The Potential Impact of an Ether ETF
If an ether ETF receives approval, it could have significant implications for the cryptocurrency market. Not only would it provide investors with an easier way to gain exposure to ethereum, but it could also attract institutional capital and increase liquidity in ETH markets.
Furthermore, the conversion of Grayscale’s ETHE and other products into ETFs could lead to a more efficient market structure, allowing for easier creation and redemption of units. This would ultimately benefit investors and contribute to the overall growth and maturation of the cryptocurrency industry.
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