• Some market analysts believe that the ETFs will increase institutional investments in Ethereum, but they are unlikely to cause major price increases.
  • Although interest in ether betting has increased significantly, an ETF would create sustained growth instead of explosive growth in the market.

ETH Price Index and Live Chart – CoinDesk”>(ETH) spot-exchange traded funds (ETFs) may increase institutional investment and power the world’s most-used blockchain, but is unlikely to create euphoric price surges, some market observers opined.

BTC Price Index and Live Chart – CoinDesk”>(BTC) ETFs in January, which sparked hope among ether traders. Ethereum’s native coin crossed the $3,000 barrier for the first since April 2022. The price of the token rose 15% in one week, beating bitcoin’s modest 8% gain in the same time period.

Crypto circles on social application X <a href="https://www.coindesk.com/markets/2024/01/10/ether-jumps-over-24k-as-traders-bet-on-possible-ether-etf-next/?_gl=1*cx2vsk*_up*MQ..*_ga*NDcwMTAxMzcuMTcwODY2OTY5MQ..*_ga_VM3STRYVN8*MTcwODY2OTY5MC4xLjAuMTcwODY2OTY5MC4wLjAuMA..#:~:text=Ether%20exchanged%20hands%20over%20%242%2C400,significant%20volatility%20in%20bitcoin%20trading. Expect such price movement to continue even after the anticipated issuance of ETFs for ether later this year. This narrative suggests that these inflows may later find their way into the Ethereum ecosystem.

Some believe that an ETF would create a sustained growth, not explosive growth, in the ether markets.

Jag Kooners told CoinDesk via email that “Ethereum-based ETFs will not cause bubbles.” “Despite concerns, an ETF that is backed by institutional investors could stabilize the Ethereum markets, similar to gold and bitcoin ETFs. This would foster sustained growth.”

He added that “Ethereum Layer 2 solutions increase scalability through faster and cheaper transactions outside of the main blockchain. This promotes growth.” “Unlike bitcoin, Ethereum’s solutions L2 prioritize rapid expansion. This could attract institutional investment, and expand the application scope.

However, an ETF for ether still faces regulatory hurdles. Kooners stated that despite ongoing discussions, “Ether’s classification as a commodity or security remains a major hurdle.”

As reported by some traditional finance firms, there’s a 50% chance that an ether ETF will be approved in May. Ether is considered “the only digital asset, other than bitcoin, to receive spot ETF approval” in the U.S.

Franklin Templeton has submitted an application for a ether ETF on Friday. Other applicants include BlackRock, Fidelity and Ark, VanEck and Invesco, Galaxy and Hashdex, Grayscale and VanEck.

Parikshit Miishra is the editor.