Ether (ETH) soared above $3,500 on July 23 in anticipation of the spot exchange-traded funds (ETFs) that went live for trading today in the United States.
Ether ETFs from VanEck, Franklin Templeton, Fidelity, 21Shares, and Invesco began trading on Cboe. BlackRock’s ETH ETF began trading on the Nasdaq. Products from Bitwise and Grayscale Investments also started trading on the New York Stock Exchange today.
Kevin O’Leary – a venture capitalist and CNBC personality known as “Mr. Wonderful” – told Cryptonews that the spot ETH ETFs would not be the index preference, however.
“When you are an institution that has never done anything with crypto, and now you have two options, you will go to the grandaddy first and put 3.5% weighting into Bitcoin,” O’Leary said.
O’Leary added that investors interested in the newly approved US spot ETH ETFs may allocate 5% weighting into both Bitcoin and Ether ETFs.
ETH ETF Volume Looks Promising
O’Leary’s prediction aside, Yahoo Finance data compiled by The Block Pro Research shows that the ETH ETFs accumulated $205 million in combined trading volume less than an hour after trading went live.
Additionally, crypto market maker Wintermute said the new spot Ether exchange-traded funds (ETFs) could see annual flows in the $4.8 – $6.4 billion range. This in turn could result in a 17.9% to 23.87% price increase in Ether.
Eric Balchunas, Bloomberg Senior ETF Analyst, provided additional context. Balchunas posted on his official X account that after 90 minutes of trading, $361 million had been allocated into funds.
Here’s where we at after 90 minutes. $361m total. As a group that number would rank them about 15th overall in ETF volume (about what $TLT and $EEM trade), which is Top 1%. But again compared to a normal ETF launch, which rarely see more than $1m on Day One, all of them have… pic.twitter.com/R5UgQFR1L6
— Eric Balchunas (@EricBalchunas) July 23, 2024
Balchunas also noted on his official X account that BlockRock’s ETF ($ETHA) volume reached $50 million after the first hour of trading. He added that if it can pass $200 million by the end of the day, it will outperform his team’s prediction.
Using BlackRock’s ETF as a proxy, $ETHA volume after first hour will be around $50m. If it can pass $200m by EOD it will be outperforming our ‘20% of btc’ estimate (given $IBIT did $1b first day). Looks promising but who knows..
— Eric Balchunas (@EricBalchunas) July 23, 2024
O’Leary Expresses Concern Over ETH ETF Fees
O’Leary also remarked that he would never personally use an ETH ETF, asking, “Why would I pay the fees?”
For context, the Ether ETF fees range from 0.19% for Franklin Templeton’s Ether ETF to a high of 2.5% for Grayscale’s Ethereum Trust. It’s also worth noting that many funds set to launch this week have temporary fee waivers to attract clients.
For example, according to the Grayscale website, Grayscale will waive a portion of its fees for the first 6 months beginning on the commencement of trading of the Shares on NYSE Arca.
“The fee will be 0% of the NAV of the Trust for the first $2.0 billion of the Trust’s assets,” the Grayscale website states. “If the Trust’s assets exceed $2.0 billion prior to the end of the 6-month period, the Sponsor’s Fee charged on assets over $2.0 billion will be 0.15%. All investors will incur the same Sponsor’s Fee, which is the weighted average of those fee rates.”
Institutions Unlikely To Use ETFs, Say O’Leary
O’Leary also believes that institutions are unlikely to use spot exchange-traded funds. He remarked this is because ETFs are products for retail investors.
“But the fact that spot ETH ETFs have been approved in the U.S. is important to allow exchanges to provide institutional services to do compliance spot pricing, have transparency and above all, to have liquidity,” O’Leary said.
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